| Mutual_Funds_Oct29_2020 |
| 3 An application for registration of a mutual fund shall be made to the Board in Form A by the sponsor. |
| 4 Every application for registration under regulation 3 shall be accompanied by non- refundable application fee as specified in the Second Schedule. |
| 5 An application, which is not complete in all respects shall be liable to be rejected : Provided that, before rejecting any such application, the applicant shall be given an opportunity to complete such formalities within such time as may be specified by the Board. |
| 6 The Board may require the sponsor to furnish such further information or clarification as may be required by it. |
| 7 For the purpose of grant of a certificate of registration, the applicant has to fulfill the following, namely (a) the sponsor should have a sound track record and general reputation of fairness andintegrity in all his business transactions.sponsor should (i) be carrying on business in financial services for a period of not less than fiveyears; and(ii) the networth is positive in all the immediately preceding five years; and(iii) the networth in the immediately preceding year is more than the capitalcontribution of the sponsor in the asset management company; and(iv) the sponsor has profits after providing for depreciation, interest and tax in threeout of the immediately preceding five years, including the fifth year; (y) trustee means a person who holds the property of the mutual fund in trust for the benefit of theunitholders and includes a trustee company and the directors of the trustee company; 19[(aa) the applicant is a fit and proper person;](b) in the case of an existing mutual fund, such fund is in the form of a trust and the trustdeed has been approved by the Board;(c) the sponsor has contributed or contributes at least 40% to the net worth of the assetmanagement company:Provided that any person who holds 40% or more of the net worth of an assetmanagement company shall be deemed to be a sponsor and will be required to fulfillthe eligibility criteria specified in these regulations;(d) the sponsor or any of its directors or the principal officer to be employed by the mutualfund should not have been guilty of fraud or has not been convicted of an offenceinvolving moral turpitude or has not been found guilty of any economic offence;(e) appointment of trustees to act as trustees for the mutual fund in accordance with theprovisions of the regulations;(f) appointment of asset management company to manage the mutual fund and operatethe scheme of such funds in accordance with the provisions of these regulations;20[(g) appointment of custodian in order to keep custody of the securities 21[or goods] orgold and gold related instrument or other assets of the mutual fund held in terms ofthese regulations, and provide such other custodial services as may be authorised bythe trustees.] |
| 7A For the purpose of determining whether an applicant or the mutual fund is a fit and proper person the Board may take into account the criteria specified in Schedule II of the Securities and Exchange Board of India (Intermediaries) Regulations, 2008.] |
| 7B (1) No sponsor of a mutual fund, its associate or group company including the asset management company of the fund, through the schemes of the mutual fund or otherwise, individually or collectively, directly or indirectly, have substitution , clause (g) read as under; (g) appointment of a custodian in order to keep custody of the securities *[or gold and gold related instruments] and carry out the custodian activities as may be authorised by the trustees. 22 Substituted by the SEBI (Intermediaries) Regulations, 2008, . Prior to its substitution, 2004, read as under : "7A. Applicability of Securities and Exchange Board of India (Criteria for Fit and Proper Person) Regulations, 2004. The provisions of the Securities and Exchange Board of India (Criteria for Fit and Proper Person) Regulations, 2004 shall, as far as may be, apply to all applicants or the mutual funds under theseregulations."(a) 10% or more of the share-holding or voting rights in the asset managementcompany or the trustee company of any other mutual fund; or(b) representation on the board of the asset management company or the trusteecompany of any other mutual fund.Any shareholder holding 10% or more of the share-holding or voting rights in the |
| 7B (2) asset management company or the trustee company of a mutual fund, shall not have, directly or indirectly, -(a) 10% or more of the share-holding or voting rights in the asset managementcompany or the trustee company of any other mutual fund; or(b) representation on the board of the asset management company or the trusteecompany of any other mutual fund. |
| 7B (3) Any person not in conformity with the sub-regulations (1) and (2) of this regulation, as on the date of the coming into force of this regulation shall comply with sub-regulations(1) and (2) within a period of one year from the date of the coming into force of thisregulation:]24[Provided that in the event of a merger, acquisition, scheme of arrangement or any otherarrangement involving the sponsors of the mutual funds, shareholders of the assetmanagement companies or trustee companies , their associates or group companies whichresults in the incidental acquisition of shares, voting rights or representation on the boardof the asset management companies or trustee companies , this regulation shall be complied |
| 8 The Board, may on receipt of all information decide the application. |
| 9 The Board may register the mutual fund and grant a certificate in Form B on the applicant paying the registration fee as specified in Second Schedule. |
| 10 The registration granted to a mutual fund under regulation 9, shall be subject to the following terms and conditions (a) the trustees, the sponsor, the asset management company and the custodian shallcomply with the provisions of these regulations;(b) the mutual fund shall forthwith inform the Board, if any information or particularspreviously submitted to the Board was misleading or false in any material respect;(c) the mutual fund shall forthwith inform the Board, of any material change in theinformation or particulars previously furnished, which have a bearing on theregistration granted by it;(d) payment of fees as specified in the regulations and the Second Schedule. |
| 11 Where the sponsor does not satisfy the eligibility criteria mentioned in regulation 7, the Board may reject the application and inform the applicant of the same. Payment of 25[annual] service fee12. A mutual fund shall pay before the 15th April each year a service fee as specified in the Second Schedule for every financial year from the year following the year of registration: Provided that the Board may, on being satisfied with the reasons for the delay permit the mutual fund to pay the service fee at any time before the expiry of two months from the commencement of the financial year to which such fee relates. |
| 14 A mutual fund shall be constituted in the form of a trust and the instrument of trust shall be in the form of a deed, duly registered under the provisions of the Indian Registration Act, 1908 (16 of 1908), executed by the sponsor in favour of the trustees named in such an instrument. |
| 15 (1) The trust deed shall contain such clauses as are mentioned in the Third Schedule and such other clauses which are necessary for safeguarding the interests of the unitholders. |
| 16 (1) A mutual fund shall appoint trustees in accordance with these regulations. |
| 16 (2) No person shall be eligible to be appointed as a trustee unless (a) he is a person of ability, integrity and standing; and(b) has not been found guilty of moral turpitude; and(c) has not been convicted of any economic offence or violation of any securities laws;and(d) has furnished particulars as specified in Form C. |
| 16 (3) 27[No asset management company and no director (including independent director), officer or employee of an asset management company shall be eligible to be appointed as a trustee of any mutual fund.] |
| 16 (4) 28[No person who is appointed as a trustee of a mutual fund shall be eligible to be appointed as a trustee of any other mutual fund: Provided that any mutual fund which is not in compliance with sub-regulation (3) or (4) as at the commencement of the Securities and Exchange Board of India (Mutual Funds) (Fifth Amendment) Regulations, 2006 shall ensure compliance therewith within three months from such commencement.] 2 |
| 16 (5) Two-thirds of the trustees shall be independent persons and shall not be associated with the sponsors or be associated with them in any manner whatsoever.] |
| 16 (6) In case a company is appointed as a trustee then its directors can act as trustees of any other trust provided that the object of the trust is not in conflict with the object of the mutualfund.to its substitution, sub-regulation (3) read as under; (3) An asset management company or any of its officers or employees shall not be eligible to act as a trusteeof any mutual fund. to its substitution, sub-regulation (4) read as under; (4) No person who is appointed as a trustee of a mutual fund can be appointed as a trustee of any othermutual fund unless (a) such a person is an independent trustee referred to in sub-regulation (5); and(b) prior approval of the mutual fund of which he is a trustee has been obtained for such an appointment. substitution, sub-regulation (5) read as under; Atleast 50% of the trustees shall be independent persons and no such trustee shall be an associate or asubsidiary or associated in any manner with the sponsor. |
| 17 (1) No trustee shall initially or any time thereafter be appointed without prior approval of the Board. |
| 17 (2) The existing trustees of any mutual fund may form a trustee company to act as a trustee with the prior approval of the Board. |
| 18 (1) The trustees and the asset management company shall with the prior approval of the Board enter into an investment management agreement. |
| 18 (2) The investment management agreement shall contain such clauses as are mentioned in the Fourth Schedule and such other clauses as are necessary for the purpose of makinginvestments. |
| 18 (3) The trustees shall have a right to obtain from the asset management company such information as is considered necessary by the trustees. |
| 18 (4) The trustees shall ensure before the launch of any scheme that the asset management company, has, (a) systems in place for its back office, dealing room and accounting;(b) appointed all key personnel including fund manager(s) for the scheme(s) andsubmitted their bio-data which shall contain the educational qualifications, pastexperience in the securities market with the trustees, within 15 days of their appoint-ment;(c) appointed auditors to audit its accounts;31[(d) appointed a compliance officer who shall be responsible for monitoring thecompliance of the Act, rules and regulations, notifications, guidelines , instructions,etc., issued by the Board or the Central Government and for redressal of investorsgrievances;](e) appointed registrars and laid down parameters for their supervision;(f) prepared a compliance manual and designed internal control mechanisms includinginternal audit systems;(g) specified norms for empanelment of brokers and marketing agents;omission, regulation 17(1) proviso read as under; Provided further that if any trustee resigns or retires, a new trustee shall be appointed within a period ofthree months with the prior approval of the Board . 29-5-2001. Prior to its substitution, clause (d) read as under; (d) appointed a compliance officer to comply with regulatory requirement and to redress investorgrievances; 32[(h) obtained, wherever required under these regulations, prior in principle approvalfrom the recognised stock exchange(s) where units are proposed to be listed.]33[(4A ) The compliance officer appointed under clause (d) of sub-regulation (4) shallimmediately and independently report to the Board any non-compliance observed by him.] |
| 18 (5) The trustees shall ensure that an asset management company has been diligent in empanelling the brokers, in monitoring securities transactions with brokers and avoiding undue concentration of business with any broker. |
| 18 (6) The trustees shall ensure that the asset management company has not given any undue or unfair advantage to any associates or dealt with any of the associates of the asset management company in any manner detrimental to interest of the unitholders. |
| 18 (7) The trustees shall ensure that the transactions entered into by the asset management company are in accordance with these regulations and the scheme. |
| 18 (8) The trustees shall ensure that the asset management company has been managing the mutual fund schemes independently of other activities and have taken adequate steps to ensure that the interest of investors of one scheme are not being compromised with those of any other scheme or of other activities of the asset management company. |
| 18 (9) The trustees shall ensure that all the activities of the asset management company are in accordance with the provisions of these regulations . |
| 18 (10) Where the trustees have reason to believe that the conduct of business of the mutual fund is not in accordance with these regulations and the scheme they shall forthwith take such remedial steps as are necessary by them and shall immediately inform the Board of the violation and the action taken by them. 34[(11) Each trustee shall file the details of his transactions of dealing in securities with the Mutual Fund on a quarterly basis.] |
| 18 (12) The trustees shall be accountable for, and be the custodian of, the funds and property of the respective schemes and shall hold the same in trust for the benefit of the unitholders in accordance with these regulations and the provisions of trust deed. |
| 18 (13) The trustees shall take steps to ensure that the transactions of the mutual fund are in accordance with the provisions of the trust deed. |
| 18 (14) The trustees shall be responsible for the calculation of any income due to be paid to the mutual fund and also of any income received in the mutual fund for the holders of the units of any scheme in accordance with these regulations and the trust deed. |
| 18 (15) The trustees shall obtain the consent of the unitholders (a) whenever required to do so by the Board in the interest of the unitholders; or |
| 19 (1) The application for the approval of the asset management company shall be made in Form D. |
| 19 (2) The provisions of regulations 5, 6 and 8 shall, so far as may be, apply to the application made under sub-regulation (1) as they apply to the application for registration of a mutualfund. |
| 20 (1) The sponsor or, if so authorised by the trust deed, the trustee, shall appoint an asset management company, which has been approved by the Board under sub-regulation (2) of regulation 21. |
| 20 (2) The appointment of an asset management company can be terminated by majority of the trustees or by seventy-five per cent of the unitholders of the scheme. |
| 20 (3) Any change in the appointment of the asset management company shall be subject to prior approval of the Board and the unitholders. |
| 21 (1) For grant of approval of the asset management company the applicant has to fulfill the following : (a) in case the asset management company is an existing asset management company ithas a sound track record, general reputation and fairness in transactions.and the profitability of the asset management company;41[(aa) the asset management company is a fit and proper person;](b) the directors of the asset management company are persons having adequateprofessional experience in finance and financial services related field and not foundguilty of moral turpitude or convicted of any economic offence or violation of anysecurities laws;(c) the key personnel of the asset management company 42[have not been found guilty ofmoral turpitude or convicted of economic offence or violation of securities laws] 43[orworked ] for any asset management company or mutual fund or any intermediary44[during the period when its] registration has been suspended or cancelled at any timeby the Board;(d) the board of directors of such asset management company has at least fifty per centdirectors, who are not associate of, or associated in any manner with, the sponsor orany of its subsidiaries or the trustees;(e) the Chairman of the asset management company is not a trustee of any mutual fund;42 Inserted ibid.. has not been working . whose .(f) the asset management company has a networth of not less than rupees 45[fifty crore]:Provided that an asset management company already granted approval under theprovisions of Securities and Exchange Board of India (Mutual Funds) Regulations,46[1996] shall within a period of 47[three years] from the date of notification of48[Securities and Exchange Board of India (Mutual Funds) (Amendment) Regulations,2014] increase its networth to rupees 49[fifty crore]:Provided further that no new schemes shall be allowed to be launched or managedby such asset management company till the networth has been raised to rupees 51[fiftycrore].]the paid up capital and free reserves of the asset management company after deductingtherefrom miscellaneous expenditure to the extent not written off or adjusted ordeferred revenue expenditure, intangible assets and accumulated losses.]53[Provided further that an asset management company of a mutual fund eligible tolaunch only infrastructure debt fund schemes, shall have a networth of not less thanrupees ten crore.]54[Provided further that in cases where the Board is satisfied that an assetmanagement company is taking steps to meet the networth requirement within thespecified time, the asset management company may be allowed to launch upto twonew schemes per year.]paid up capital and free reserves of the asset management company after deducting45 Substituted by the SEBI (Mutual Funds) (Amendment) Regulations, 2014, , for thewords, ten crores .46 Substituted by the SEBI (Mutual Funds) (Amendment) Regulations, 2014, , for thefigure, 1993 .47 Substituted by the SEBI (Mutual Funds) (Amendment) Regulations, 2014, , for thefigure, twelve months .the words, these regulations .49 Substituted by the SEBI (Mutual Funds) (Amendment) Regulations, 2014, , for thewords, ten crores .as under:"Provided further that the period specified in the first proviso may be extended in appropriate cases by theBoard up to three years for reasons to be recorded in writing:"51 Substituted by the SEBI (Mutual Funds) (Amendment) Regulations, 2014, , for thewords, ten crores .substitution, explanation read as under;company. therefrom miscellaneous expenditure to the extent not written off or adjusted ordeferred revenue expenditure, intangible assets and accumulated losses. ] |
| 22 The approval granted under sub-regulation (2) of regulation 21 shall be subject to the following conditions, namely: (a) any director of the asset management company shall not hold the office of the directorin another asset management company unless such person is an independent directorreferred to in clause (d) of sub-regulation (1) of regulation 21 and approval of theBoard of asset management company of which such person is a director, has beenobtained;(b) the asset management company shall forthwith inform the Board of any materialchange in the information or particulars previously furnished, which have a bearingon the approval granted by it;(c) no appointment of a director of an asset management company shall be made withoutprior approval of the trustees;(d) the asset management company undertakes to comply with these regulations;56[(e) no change in the controlling interest of the asset management company shall bemade unless, (i) prior approval of the trustees and the Board is obtained;(ii) a written communication about the proposed change is sent to each unitholderand an advertisement is given in one English daily newspaper having nationwidecirculation and in a newspaper published in the language of the region where theHead Office of the mutual fund is situated; and(iii) the unitholders are given an option to exit on the prevailing Net Asset Valuewithout any exit load;](f) the asset management company shall furnish such information and documents to thetrustees as and when required by the trustees.to its substitution, clause (e) read as under;. *[(e) any change in controlling interest of the asset management company shall be only with prior approvalof trustees, the Board and the unitholders. Provided that in case of an open ended scheme, the consent of the unitholders shall not be necessary if;(i)(ii)the change in control takes place after one year from the date of allotment of units(ii) the unitholders are informed about the proposed change in the controlling interest of assetmanagement company by sending individual communication and an advertisement is given in oneEnglish daily newspaper having nationwide circulation and in a newspaper published in thelanguage of the region where the head office of the mutual fund is situated.(iii)The unitholders are given an option to exit at the prevailing Net Asset Value without any exit load.]" |
| 23 Where an application made under regulation 19 for grant of approval does not satisfy the eligibility criteria laid down in regulation 21, the Board may reject the application . |
| 24 The asset management company shall, -(a) not act as a trustee of any mutual fund;(b) not undertake any business activities other than in the nature of management andadvisory services provided to pooled assets including offshore funds, insurancefunds, pension funds, provident funds, or 58[such categories of foreign portfolioinvestor subject to such conditions, as maybe specified by the Board from time totime], if any of such activities are not in conflict with the activities of the mutualfund:Provided that the asset management company may itself or through its subsidiariesundertake such activities, as permitted under clause (b), if, -(i)it satisfies the Board that bank and securities accounts are segregated activitywise;substitution, regulation 24 read as under: *[24. Restrictions on business activities of the asset management company. The asset managementcompany shall (1) not act as a trustee of any mutual fund;(2) not undertake any other business activities except activities in the nature of [portfolio managementservices,] management and advisory services to offshore funds, pension funds, provident funds, venturecapital funds, management of insurance funds, financial consultancy and exchange of research oncommercial basis if any of such activities are not in conflict with the activities of the mutual fund :Provided that the asset management company may itself or through its subsidiaries undertake suchactivities if it satisfies the Board that the key personnel of the asset management company, the systems,back office, bank and securities accounts are segregated activity-wise and there exist systems to prohibitaccess to inside information of various activities:Provided further that asset management company shall meet capital adequacy requirements, if any,separately for each such activity and obtain separate approval, if necessary under the relevant regulations. |
| 24 (3) The asset management company shall not invest in any of its schemes unless full disclosure of itsintention to invest has been made in the offer documents [in case of schemes launched after thenotification of these regulations ] :Provided that an asset management company shall not be entitled to charge any fees on its investment inthat scheme.] [*amended by the SEBI (Mutual Funds) (Amendment) Regulations, 1999, and SEBI(Mutual Funds) (Amendment) Regulations, 1998, ]India (Foreign Portfolio Investors) Regulations, 2014 by the SEBI (Mutual Funds) (Second Amendment)Regulations, 2015, (ii)it meets with the capital adequacy requirements, if any, separately for eachsuch activity and obtain separate approval, if necessary under the relevant regulations ;(iii) it ensures that there is no material conflict of interest across differentactivities;(iv) the absence of conflict of interest shall be disclosed to the trustees and unitholders in scheme information document and statement of additionalinformation;(v)there are unavoidable conflict of interest situations, it shall satisfy itself thatdisclosures are made of source of conflict, potential material risk or damage to investor interests and detailed parameters for the same;(vi) it appoints separate fund manager for each separate fund managed by it unlessthe investment objectives and asset allocation are same and the portfolio isreplicated across all the funds managed by the fund manager, within a periodof six months from the date of notification of Securities and Exchange Board of India (Mutual Funds) (Amendment) Regulations, 2011;59[Provided that the requirements of this clause shall not apply if the fundsmanaged are of 60[such categories of foreign portfolio investor subject to suchconditions, as maybe specified by the Board from time to time]].(vii) it ensures fair treatment of investors across different products that shallinclude, but not limited to, simultaneous buy and sell in the same equitysecurity only through market mechanism and a written trade ordermanagement system; and(viii) it ensures independence to key personnel handling the relevant conflict ofinterest is provided through removal of direct link between remuneration torelevant asset management company personnel and revenues generated bythat activity:Provided further that the asset management company may, itself or through its subsidiaries,undertake portfolio management services and advisory services for other than broad basedfund till further directions, as may be specified by the Board , subject to compliance withthe following additional conditions:-(i)it satisfies the Board that key personnel of the asset management company,the system, back office, bank and securities accounts are segregated activitywise and there exist system to prohibit access to inside information ofvarious activities;are appropriately regulated broad based funds, as specified in Securities and Exchange Board of India(Foreign Portfolio Investors) Regulations, 2014 , by the SEBI (Mutual Funds) (Second Amendment)Regulations, 2015, (ii)it meets with the capital adequacy requirements, if any, separately for eachof such activities and obtain separate approval, if necessary under therelevant regulations .61[Provided further that an asset management company may become a proprietarytrading member for carrying out trades in the debt segment of the recognised stockexchanges, on behalf of its mutual fund schemes and may also become a self-clearingmember of the recognised clearing corporations to clear and settle trades in the debtsegment on behalf of its mutual fund schemes.](vi) of first proviso to clause (b)], the term broad based fund shall mean the fund whichhas at least twenty investors and no single investor account for more than twenty fivepercent of corpus of the fund.] |
| 25 (1) The asset management company shall take all reasonable steps and exercise due diligence to ensure that the investment of funds pertaining to any scheme is not contrary to the provisions of these regulations and the trust deed. |
| 25 (2) The asset management company shall exercise due diligence and care in all its investment decisions as would be exercised by other persons engaged in the same business. 63[2A) The asset management company shall obtain, wherever required under these regulations, prior in-principle approval from the recognized tock exchange(s) where units are proposed to be listed .] |
| 25 (3) The asset management company shall be responsible for the acts of commission or omission by its employees or the persons whose services have been procured by the asset management company. |
| 25 (4) The asset management company shall submit to the trustees quarterly reports of each year on its activities and the compliance with these regulations. |
| 25 (5) The trustees at the request of the asset management company may terminate the assignment of the asset management company at any time: Provided that such termination shall become effective only after the trustees have accepted the termination of assignment and communicated their decision in writing to the asset management company. |
| 25 (6) Notwithstanding anything contained in any contract or agreement or termination, the asset management company or its directors or other officers shall not be absolved of 19-8-2013. Prior to its substitution, the proviso read as under; Provided further that the asset management company may become a proprietary trading member for carrying out trades in the debt segment of a recognised stock exchange, on behalf of a mutual fund liability to the mutual fund for their acts of commission or omission, while holding such position or office. 64[(6A) 65[(a )] The Chief Executive Officer (66[whatever be the designation]) of the asset management company shall ensure that the mutual fund complies with all the provisions of these regulations and the guidelines or circulars issued in relation thereto from time to time and that the investments made by the fund managers are in the interest of the unit holders and shall also be responsible for the overall risk management function of the mutualfund.67[(b) Chief Executive Officer (whatever be the designation) shall also ensure that theAsset Management Company has adequate systems in place to ensure that the Code ofConduct for Fund Managers and Dealers specified in PART - B of the Fifth Schedule ofthese regulations are adhered to in letter and spirit. Any breach of the said Code of Conductshall be brought to the attention of the Board of Directors of the Asset ManagementCompany and Trustees.]mean and include the Securities and Exchange Board of India (Mutual Funds) Regulations,1996 as amended from time to time.(6B) 68[(a)]The fund managers 69[(whatever be the designation )] shall ensure that thefunds of the schemes are invested to achieve the objectives of the scheme and in the interestof the unit holders.]70[(b) The Fund Managers (whatever be the designation) shall abide by the Code ofConduct for Fund Managers and Dealers specified in PART - B of the Fifth Schedule ofSecurities and Exchange Board of India (Mutual Funds) Regulations, 1996 and submit aquarterly self-certification to the Trustees that they have complied with the said code ofconduct or list exceptions, if any. Fund Managers shall include Chief Investment Officer (whatever be the designation).]71[(6C) (a) The Dealers (whatever be the designation) shall ensure that orders are executedon the best available terms, taking into account the relevant market at the time fortransactions of the kind and size concerned to achieve the objectives of the scheme and inthe best interest of all the unit holders.sub-regulation,purposesofthisthephraseForthethe words whatever his designation may be .67 Inserted ibid.68 Inserted ibid..the words whatever the designation may be .70 Inserted ibid.71 Inserted ibid.(b) The Dealers (whatever be the designation) shall abide by the Code of Conduct for FundManagers and Dealers specified in PART - B of the Fifth Schedule of the Securities andExchange Board of India (Mutual Funds) Regulations, 1996 and submit a quarterly self-certification to the Trustees that they have complied with the said code of conduct or listexceptions, if any.] 72 |
| 25 (7)(a) An asset management company shall not through any broker associated with the sponsor, purchase or sell securities, which is average of 5 per cent or more of the aggregate purchases and sale of securities made by the mutual fund in all its schemes : Provided that for the purpose of this sub-regulation, the aggregate purchase and sale of securities shall exclude sale and distribution of units issued by the mutual fund : Provided further that the aforesaid limit of 5 per cent shall apply for a block of any threemonths.(b) An asset management company shall not purchase or sell securities through any broker[other than a broker referred to in clause (a) of sub-regulation (7)] which is average of 5per cent or more of the aggregate purchases and sale of securities made by the mutual fundin all its schemes, unless the asset management company has recorded in writing thejustification for exceeding the limit of 5 per cent and reports of all such investments aresent to the trustees on a quarterly basis :Provided that the aforesaid limit shall apply for a block of three months.] |
| 25 (8) An asset management company shall not utilise the services of the sponsor or any of its associates, employees or their relatives, for the purpose of any securities transaction and distribution and sale of securities: Provided that an asset management company may utilise such services if disclosure to that effect is made to the unitholders and the brokerage or commission paid is also disclosed in the half-yearly annual accounts of the mutual fund : 73[Provided further that the mutual funds shall disclose at the time of declaring half-yearly and yearly results :(i) any underwriting obligations undertaken by the schemes of the mutual funds withrespect to issue of securities associate companies,(ii) devolvement, if any,(iii) subscription by the schemes in the issues lead managed by associate companies,(iv) subscription to any issue of equity or debt on private placement basis where thesponsor or its associate companies have acted as arranger or manager.] |
| 25 (9) The asset management company shall file with the trustees the details of transactions in securities by the key personnel of the asset management company in their own name or on behalf of the asset management company and shall also report to the Board , as and when required by the Board . substitution, sub-regulation 7 read as under; (7) No asset management company shall deal in securities through any broker associated with the sponsor or a firm which is an associate of a sponsor beyond 5% of the daily gross business of the mutual fund. |
| 25 (10) In case the asset management company enters into any securities transactions with any of its associates a report to that effect shall be sent to the trustees 75[at its next meeting]. |
| 25 (11) In case any company has invested more than 5 per cent of the net asset value of a scheme, the investment made by that scheme or by any other scheme of the same mutual fund in that company or its subsidiaries shall be brought to the notice of the trustees by the asset management company and be disclosed in the half-yearly and annual accounts of the respective schemes with justification for such investment 76[provided the latter investment has been made within one year of the date of the former investment calculated on either side]. |
| 25 (12) The asset management company shall file with the trustees and the Board (a) detailed bio-data of all its directors along with their interest in other companies withinfifteen days of their appointment;(b) any change in the interests of directors every six months; and77[(c) a quarterly report to the trustees giving details and adequate justification about thepurchase and sale of the securities of the group companies of the sponsor or the assetmanagement company, as the case may be, by the mutual fund during the saidquarter.] 78[(13) Each director of the asset management company shall file the details of his transactions of dealing in securities with the trustees on a quarterly basis in accordance with guidelines issued by the Board.] |
| 25 (14) The asset management company shall not appoint any person as key personnel who has been found guilty of any economic offence or involved in violation of securities laws. |
| 25 (15) The asset management company shall appoint registrars and share transfer agents who are registered with the Board : Provided if the work relating to the transfer of units is processed in-house, the charges at competitive market rates may be debited to the scheme and for rates higher than the competitive market rates, prior approval of the trustees shall be obtained and reasons for charging higher rates shall be disclosed in the annual accounts. |
| 26 (1) The mutual fund shall appoint a Custodian to carry out the custodial services for the schemes of the fund and sent intimation of the same to the Board within fifteen days of the appointment of the Custodian: 82[Provided that in case of a gold exchange traded fund scheme, the assets of the scheme being gold or gold related instruments may be kept in the custody of a custodian registered with the Board:] 83[Provided further that in case of a real estate mutual fund scheme, the title deed of real estate assets held by it may be kept in the custody of a custodian registered with the Board.] 84[Provided also that mutual fund schemes investing in exchange traded commodity derivatives may appoint a custodian to have custody of the underlying goods in case of physical settlement of such contracts.] substitution the proviso read as under; Provided that in case of a gold exchange traded fund scheme, the assets of the scheme being gold or gold related instruments may be kept in custody of a bank which is registered as a custodian with the Board:] |
| 26 (2) No custodian in which the sponsor or its associates hold 50 per cent or more of the voting rights of the share capital of the custodian or where 50 per cent or more of the directors of the custodian represent the interest of the sponsor or its associates shall act as custodian for a mutual fund constituted by the same sponsor or any of its associates or subsidiary company: 85[Provided that where the sponsor or its associates hold 50 per cent or more of the voting rights of the share capital of the custodian, such custodian may act as custodian for a mutual fund constituted by the same sponsor or any of its associates or subsidiary company if:(i) the sponsor has a net worth of at least twenty thousand crore rupees atall points of time;(ii) 50 per cent or more of the directors of the custodian are those who donot represent the interest of the sponsor or its associates;(iii)the custodian and the asset management company of a mutual fund arenot subsidiaries of each other;(iv) no person is a director of both the custodian and the asset managementcompany of a mutual fund; and(v) the custodian and the asset management company of a mutual fundsign an undertaking that they will act independently of each other intheir dealings with the scheme. ] |
| 27 The mutual fund shall enter into a custodian agreement with the custodian, which shall contain the clauses which are necessary for the efficient and orderly conduct of the affairs of the custodian: Provided that the agreement, the service contract, terms and appointment of the custodian |
| 29 (1) The offer document shall contain disclosures which are adequate in order to enable the investors to make informed investment decision 89[including the disclosure on maximum investments proposed to be made by the scheme in the listed securities of the group companies of the sponsor.] |
| 29 (2) The Board may in the interest of investors require the asset management company to carry out such modifications in the offer document as it deems fit. |
| 29 (3) In case no modifications are suggested by the Board in the offer document within 21 90[working] days from the date of filing, the asset management company may issue the offer document. |
| 29 (4) No one shall issue any form of application for units of a mutual fund unless the form is accompanied by the memorandum containing such information as may be specified by the Board.] (2) Every mutual fund shall along with the offer document of each scheme pay filing fees as specified in the Second Schedule. substitution the proviso read as under; (4) The sponsor or asset management company shall invest not less than one percent of the amount which would be raised in the new fund offer or fifty lakh rupees, whichever is less, in the growth option of the scheme and such investment shall not be redeemed unless the scheme is wound up: Provided that this sub-regulation shall not apply to close ended schemes . 9 |
| 29 (5) The offer document shall contain the disclosure regarding the prior in principle approval obtained from the recognized stock exchange(s), where units are proposed to be listed in accordance with these regulations.] |
| 38 No guaranteed return shall be provided in a scheme, (a) unless such returns are fully guaranteed by the sponsor or the asset managementcompany;(b) unless a statement indicating the name of the person who will guarantee the return, ismade in the offer document;(c) the manner in which the guarantee is to be met has been stated in the offer document.123[Capital Protection oriented schemes A unit certificate . |
| 38A A capital protection oriented scheme may be launched, subject to the following:(a) the units of the scheme are rated by a registered credit rating agency from theviewpoint of the ability of its portfolio structure to attain protection of the capitalinvested therein;(b) the scheme is close ended; and(c) there is compliance with such other requirements as may be specified by the Boardin this behalf.] |
| 42 After the receipt of the report under sub-regulation (3) of regulation 41, if the Board is satisfied that all measures for winding up of the scheme have been complied with, the scheme shall cease to exist. |
| 42A The units of a mutual fund scheme shall be delisted from a recognised stock exchange |
| 28 (1) No scheme shall be launched by the asset management company unless such scheme is approved by the trustees and a copy of the offer document has been filed with the Board. |
| 28 (2) The mutual fund shall pay the minimum filing fee specified in the Second Schedule to the Board while filing the offer document under sub-regulation (1). its substitution, sub-regulation (2) read as under ; |
| 28 (3) The mutual fund shall pay the balance filing fee calculated in accordance with the Second Schedule to the Board within such time as may be specified by the Board.] 87[ |
| 28 (4) The sponsor or asset management company shall invest not less than one percent of the amount which would be raised in the new fund offer or fifty lakh rupees, whichever is less, and such investment shall not be redeemed unless the scheme is wound up: Provided that the investment by the sponsor or asset management company shall be made in such option of the scheme, as may be specified by the Board.] |
| 28 (5) The sponsor or asset management company of schemes existing as on date of notification of the SEBI(Mutual Funds)(Amendment) Regulations, 2014 shall invest not less than one percent of the assets under management of the scheme as on date of notification of these regulations or fifty lakh rupees, whichever is less, in the growth option of the scheme and such investment shall not be redeemed unless the scheme is wound up: Provided that the amount calculated as per this sub-regulation shall be invested within one year from the date of notification of these regulations: Provided further this sub-regulation shall not apply to close ended schemes.] |
| 29A (1) The asset management company shall provide an option to the unitholder to nominate, in the manner specified in Fourth Schedule , a person in whom the units held by him shall vest in the event of his death. |
| 29A (2) Where the units are held by more than one person jointly, the joint unitholders may together nominate a person in whom all the rights in the units shall vest in the event of death of all the joint unitholders.] |
| 30 Advertisements shall be in conformity with the Advertisement Code as specified in the Sixth Schedule and shall be submitted to the Board within 7 days from the date of issue. |
| 31 The offer document and advertisement materials shall not be misleading or contain any statement or opinion which are incorrect or false. |
| 31A The listed entity , which intends to list units of its scheme on the recognised stock exchange(s), shall obtain in-principle approval from recognised stock exchange(s) in the manner as specified by the recognised stock exchange(s) from time to time. |
| 31B (1) Every mutual fund desirous of listing units of its schemes on a recognised stock exchange shall execute an agreement with such stock exchange. |
| 31B (2) Every mutual fund which has previously entered into agreements with a recognised stock exchange to list units of its schemes shall execute a fresh listing agreement with such 21-2-2012. .96 Sub-regulation (2) omitted, ibid. Prior to its omission, sub-regulation (2) read as under,- (2) The advertisement for each scheme shall disclose investment objective of each scheme. 12- 2015stock exchange within six months of the date of notification of Securities and ExchangeBoard of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.] |
| 32 Every close ended scheme shall be listed in a recognized stock exchange within six months from the closure of the subscription: Provided that listing of close ended scheme shall not be mandatory (a) if the said scheme provides for periodic repurchase facility to all the unitholders with restriction, if any,on the extent of such repurchase; or(b) if the said scheme provides for monthly income or caters to special classes of persons like senior citizens,women, children, widows or physically handicapped or any special class of persons providing for repurchaseof units at regular intervals; or(c) if the details of such repurchase facility are clearly disclosed in the offer document; or(d) if the said scheme opens for repurchase within a period of six months from the closure of subscription.*[(e) if the said scheme is a capital protection oriented scheme.] 99 Substituted by the SEBI (Mutual Funds) (Amendment) Regulations, 2009, . Prior to itssubstitution, clause (1) read as under; (1) The asset management company may at its option repurchase or reissue the repurchased units of a closeended scheme. India (Mutual Funds) (Amendment) Regulations, 2009 shall not be repurchased before theend of maturity period of such scheme. |
| 32 (2) The units of close ended schemes referred to in the proviso to regulation 32 may beopen for sale or redemption at fixed predetermined intervals 1 if the maximum andminimum amount of sale or redemption of the units and the periodicity of such sale orredemption have been disclosed in the offer document.1(3) The units of close ended scheme may be converted into open-ended scheme, (a) if the offer document of such scheme discloses the option and the period of suchconversion; or102[(b) the unitholders are provided with an option to redeem their units in full 103[; and]]104[(c) the initial issue expenses of the scheme launched prior to commencement of theSecurities and Exchange Board of India (Mutual Funds) (Amendment) Regulations,2008 have been amortised fully in accordance with the Tenth Schedule . |
| 32 (4) A close ended scheme shall be fully redeemed at the end of the maturity period 1106[Provided that a close-ended scheme may be allowed to be rolled over if the purpose,period and other terms of the roll over and all other material details of the scheme includingthe likely composition of assets immediately before the roll over, the net assets and netasset value of the scheme, are disclosed to the unitholders and a copy of the same has beenfiled with the Board :Provided further that such roll over will be permitted only in the case of those unitholderswho express their consent in writing and the unitholders who do not opt for the roll over orhave not given written consent shall be allowed to redeem their holdings in full at net assetvalue based price.]1-1998.clause (2A) read as under; * [(2A) The asset management company shall not repurchase units of a capital protection oriented schemebefore end of the maturity period.] the majority of the unitholders gives a consent to that effect. substitution, clause (c) read as under; *[(c) the initial issue expenses of the scheme have been amortised fully in accordance with the TenthSchedule.] 105 The words, unless a majority of the unitholders otherwise decide for its roll over by passing a resolution |
| 33 99[(1) Units of a close ended scheme, other than those of an equity linked savings scheme, launched on or after the commencement of the Securities and Exchange Board of 98 Substituted by the SEBI (Mutual Funds) (Amendment) Regulations, 2009, . Prior to its substitution, regulation 32 read as under; |
| 34 No scheme of a mutual fund other than the 107[initial] offering period of any equity linked savings schemes shall be open for subscription for more than 108[15] days: 109[Provided that in case of mutual fund schemes eligible under Rajiv Gandhi Equity Savings Scheme, the period specified in this regulation shall not be more than thirtydays.] |
| 35 (1) The asset management company shall specify in the offer document, (a) the minimum subscription amount it seeks to raise under the scheme; and(b) in case of oversubscription the extent of subscription it may retain :Provided that where the asset management company retains the oversubscription referredto in clause (b), all the applicants applying upto five thousand units shall be given fullallotment subject to the oversubscription mentioned in clause (b). |
| 35 (2) The mutual fund and asset management company shall be liable to refund the application money to the applicants, (i) if the mutual fund fails to receive the minimum subscription amount referred to inclause (a) of sub-regulation (1);(ii) if the moneys received from the applicants for units are in excess of subscription asreferred to in clause (b) of sub-regulation (1). |
| 35 (3) Any amount refundable under sub-regulation (2) shall be refunded within a period of 110[five working days] from the date of closure of subscription list, by Registered post with acknowledgement due and by cheque or demand draft marked A/c payee to the applicants: 111[Provided that in case of mutual fund schemes eligible under Rajiv Gandhi Equity Savings Scheme, the period specified in this sub-regulation shall be fifteen days from the closure of the initial subscription list.] |
| 35 (4) In the event of failure to refund the amounts within the period specified in sub- regulation (3), the asset management company shall be liable to pay interest to the applicants at a rate of fifteen per cent per annum from the expiry of 112[five working days] from the date of closure of the subscription list: 113[Provided that in case of mutual fund schemes eligible under Rajiv Gandhi Equity Savings Scheme, the period specified in this sub-regulation shall be fifteen days |
| 36 The asset management company shall issue to the applicant whose application has been accepted , unit certificates or a statement of accounts specifying the number of units allotted to the applicant as soon as possible but not later than six weeks from the date of closure of the *[initial subscription list and/or from the date of receipt of the request from the unitholders in any open ended scheme] : Provided that if an applicant so desires, the asset management company shall issue the unit certificates to the applicant within six weeks of the receipt of request for the certificate. |
| 37 (1) 121[A unit] unless otherwise restricted or prohibited under the scheme, shall be freely transferable by act of parties or by operation of law. 122[(1A) A unitholder, in a close ended scheme listed on a recognized stock exchange , who desires to trade in units shall hold units in dematerialised form .] |
| 37 (2) The asset management company shall, on production of instrument of transfer together with relevant unit certificates, register the transfer and return the unit certificate to the transferee within thirty days from the date of such production: Provided that if the units are with the depository such units will be transferable in accordance with the provisions of the Securities and Exchange Board of India (Depositories and Participants) Regulations, 1996. |
| 39 (1) A close-ended scheme shall be wound up on the expiry of duration fixed in the scheme on the redemption of the units unless it is rolled over for a further period under sub-regulation (4) of regulation 33. |
| 39 (2) A scheme of a mutual fund may be wound up, after repaying the amount due to the unit holders, (a) on the happening of any event which, in the opinion of the trustees, requires thescheme to be wound up; or(b) if seventy-five per cent of the unit holders of a scheme pass a resolution that thescheme be wound up; or(c) if the Board so directs in the interest of the unitholders. |
| 39 (3) Where a scheme is to be wound up under 1 sub-regulation (2), the trustees shall give notice disclosing the circumstances leading to the winding up of the scheme: (a) to the Board; and(b) in two daily newspapers having circulation all over India, a vernacular newspapercirculating at the place where the mutual fund is formed. |
| 40 On and from the date of the publication of notice under clause (b) of sub-regulation (3) of regulation 39, the trustee or the asset management company as the case may be, shall (a) cease to carry on any business activities in respect of the scheme so wound up;(b) cease to create or cancel units in the scheme;(c) cease to issue or redeem units in the scheme. |
| 41 (1) The trustee shall call a meeting of the unitholders to approve by simple majority of the unitholders present and voting at the meeting resolution for authorising the trustees or any other person to take steps for winding up of the scheme: Provided that a meeting of the unitholders shall not be necessary if the scheme is wound up at the end of maturity period of the scheme. . |
| 41 (2)(a) The trustee or the person authorised under sub-regulation (1) shall dispose of the assets of the scheme concerned in the best interest of the unitholders of that scheme.(b) The proceeds of sale realised under clause (a), shall be first utilised towards dischargeof such liabilities as are due and payable under the scheme and after making appropriateprovision for meeting the expenses connected with such winding up , the balance shall bepaid to the unitholders in proportion to their respective interest in the assets of the schemeas on the date when the decision for winding up was taken. |
| 41 (3) On the completion of the winding up , the trustee shall forward to the Board and the unitholders a report on the winding up containing particulars such as circumstances leading to the winding up , the steps taken for disposal of assets of the fund before winding up , expenses of the fund for winding up , net assets available for distribution to the unit holders and a certificate from the auditors of the fund. |
| 41 (4) Notwithstanding anything contained in this regulation, the provisions of these regulations in respect of disclosures of half-yearly reports and annual reports shall continue |
| 49 (1) The price at which the units may be subscribed or sold and the price at which such units may at any time be repurchased by the mutual fund shall be made available to the investors 145[in the manner specified by the Board]. substitution, regulation 47 read as under; 47. Method of valuation of investments. Every mutual fund shall compute and carry out valuation of its investments in its portfolio and publish the same in accordance with the valuation norms specified in Eighth Schedule. 143 Substituted by the SEBI (Mutual Funds) (Second Amendment) Regulations, 2012, . Prior to its substitution, sub-regulation (2) read as under: (2) The Net Asset Value of the scheme shall be calculated and published at least in two daily newspapers at intervals of not exceeding one week : Provided that the Net Asset Value of a close ended scheme, other than that of equity linked savings scheme, shall be calculated on daily basis and published in at least two daily newspapers having circulation all over India. by the SEBI (Mutual Funds) (Second Amendment) Regulations, 2018, . 145 Inserted ibid. |
| 49 (2) 146[The mutual fund shall provide the methodology of calculating the sale and repurchase price of units in the manner specified by the Board.] |
| 49 (3) While determining the prices of the units, the mutual fund shall ensure that the repurchase price is not lower than 93 per cent of the Net Asset Value and the sale price is not higher than 107 per cent of the Net Asset Value: 147[Provided that the repurchase price of the units of close ended scheme launched prior to the commencement of the Securities and Exchange Board of India (Mutual Funds) (Amendment) Regulations, 2009 shall not be lower than ninety five per cent of the Net Asset Value:] Provided further that the difference between the repurchase price and the sale price of the unit shall not exceed 7 per cent calculated on the sale price: 1 149[(3A) Where a mutual fund repurchases units in a close ended scheme 150[launched prior to the commencement of the Securities and Exchange Board of India (Mutual Funds) (Amendment) Regulations, 2009] which fulfils the conditions mentioned in sub-regulation (3B), it shall deduct an amount representing proportionate initial issue expenses or part thereof remaining unamortized, from the repurchase proceeds. unamortised refers to such proportion of the expenses of the scheme as are attributable to the units being repurchased. 151[(3B) The conditions referred to in sub-regulation (3A) are the following:(a) the scheme is launched after the commencement of the Securities and ExchangeBoard of India (Mutual Funds)(Second Amendment) Regulations, 2006 and prior toto the substitution, sub-regulation (2) read as follows: (2) The mutual fund, in case of open-ended scheme, shall at least once a week publish in a daily newspaperof all India circulation, the sale and repurchase price of units. substitution, proviso read as under; Provided that the repurchase price of the units of a close ended scheme shall not be lower than 95 per centof the Net Asset Value: proviso read as under; Provided further that no entry load shall be charged by any close-ended scheme after commencement of theSecurities and Exchange Board of India (Mutual Funds) (Second Amendment) Regulations, 2006. substitution, sub regulation (3B) read as under; (3B) The conditions referred to in sub-regulation (3A) are the following :(Mutual Funds) (Second Amendment) Regulations, 2006; andcharged to the mutual fund, as per clause (a) of sub-regulation (4) of regulation 52. the scheme is launched after commencement of the Securities and Exchange Board of India(a)(b)initial issue expenses in respect of the scheme have been charged or are proposed to becommencement of the Securities and Exchange Board of India (Mutual Funds)(Amendment) Regulations, 2008;(b) initial issue expenses in respect of the scheme are accounted in the books of accountsof the scheme in accordance with Tenth Schedule.](3C) The amount recovered under sub-regulation (3A) shall be credited to the unamortizedinitial issue expenses of the scheme.] |
| 49 (4) The price of units shall be determined with reference to the last determined Net Asset Value as mentioned in sub-regulation (3) unless, (a) the scheme announces the Net Asset Value on a daily basis; and |
| 43 The moneys collected under any scheme of a mutual fund shall be invested only in transferable securities in the money market or in the capital market or in privately placed debentures or securitised debts: Provided that moneys collected under any money market scheme of a mutual fund shall be invested only in money market instruments in accordance with directions issued by the Reserve Bank of India: Provided further that in case of securitised debts such fund may invest in asset backed securities *[and] mortgaged backed securities.(a) securities;(b) money market instruments;(c) privately placed debentures;(d) securitised debt instruments, which are either asset backed or mortgage backedsecurities; 1(e) gold or gold related instruments129[; or]130[(f) real estate assets as defined in clause (a) of regulation 49A 131[;or]]132[(g)infrastructure debt instrument and assets as specified in clause (1) of regulation 49L. |
| 43 (2) Any investment made under sub-regulation (1) shall be in accordance with theinvestment objective of the relevant mutual fund scheme. |
| 43 (3) Moneys collected under any money market scheme of a mutual fund shall be investedonly in money market instruments. |
| 43 (4) Moneys collected under any gold exchange traded fund scheme shall be invested onlyin gold or gold related instruments, in accordance with sub-regulation (5) of regulation 44.]13 |
| 43 (5) Moneys collected under a real estate mutual fund scheme shall be invested inaccordance with regulation 49E.] |
vii. sebi (mutual funds) (amendment) regulations, 2003 g these regulations were notified on may 29, 2003. g fund of funds scheme has been introduced. prohibition against investing in other schemes of mutual funds has been removed for such funds. ceo of amc shall be responsible to ensure compliance with the regulations. |
| 44 (1) Any investment to be made under regulation 43 shall be invested subject to the investment restriction specified in the Seventh Schedule: 134[Provided that nothing in the Seventh Schedule 135[, save clause 14 therein] shall apply to a gold exchange traded fund scheme.] 136[(1A) The mutual fund having an aggregate of securities which are worth Rs. 10 crores or more, as on the latest balance-sheet date, shall subject to such instructions as may be issued from time to time by the Board settle their transactions entered on or after January 15, 1998, only through dematerialised securities .] |
| 44 (2) The mutual fund shall not borrow except to meet temporary liquidity needs of the mutual funds for the purpose of repurchase, redemption of units or payment of interest or dividend to the unitholders: Provided that the mutual fund shall not borrow more than 20 per cent of the net asset of the scheme and the duration of such a borrowing shall not exceed a period of six months. 130 Inserted ibid. 132 Inserted, ibid. |
| 44 (3) Save as otherwise expressly provided under these regulations, the mutual fund shall not advance any loans for any purpose.] 1 |
| 44 (4) A mutual fund may lend and borrow securities in accordance with the framework relating to short selling and securities lending and borrowing specified by the Board.] 13 |
| 44 (5) A gold exchange traded fund scheme shall be subject to the following investment restrictions:(a) 1(b) the funds of any such scheme shall be invested only in gold or gold related instrumentsin accordance with its investment objective, except to the extent necessary to meet theliquidity requirements for honouring repurchases or redemptions, as disclosed in theoffer document; and(c) pending deployment of funds in accordance with clause (b), the mutual fund mayinvest such funds in short-term deposits of scheduled commercial banks.]forwardtransactions, derivativestransactions and short selling141[Carry |
| 45 The funds of a scheme shall not in any manner be used in option trading or in short selling or carry forward transactions: Provided that a mutual fund may enter into derivatives transactions in a recognised stock exchange, subject to such Guidelines as may be specified by the Board ]. [*Amended by the SEBI (Mutual Funds) (Second Amendment) Regulations, 2006, and SEBI (Mutual Funds) (Amendment).] |
| 46 Mutual funds may enter into underwriting agreement after obtaining a certificate of registration in terms of the Securities and Exchange Board of India (Underwriters) Rules and Securities and Exchange Board of India (Underwriters) Regulations, 1993 authorising it to carry on activities as underwriters. deemed as if investments are made in such securities . |
| 46 (2) The capital adequacy norms for the purpose of underwriting shall be the net asset of thescheme:Provided that the underwriting obligation of a mutual fund shall not at any time exceedthe total net asset value of the scheme. |
| 47 Every mutual fund shall ensure that the asset management company computes and carries out valuation of investments made by its scheme(s) in accordance with the investment valuation norms specified in Eighth Schedule, and publishes the same.] |
| 48 (1) Every mutual fund shall compute the Net Asset Value of each scheme by dividing the net assets of the scheme by the number of units outstanding on the valuation date. |
| 48 (2) The Net Asset Value of the scheme shall be calculated on daily basis and 144[disclosed in the manner specified by the Board ].] |
| 49A Definitions |
| 49E Permissible investments |
| 49K Duties of trustees Disclosures in offer document and other disclosures |
| 49O 49OA. Eligibility criteria for launching infrastructure debt fund scheme Offering Period Conditions for infrastructure debt fund schemes Private Placement |
| 49S Disclosures in offer document and other disclosures |
| 50 (1) Every asset management company for each scheme shall keep and maintain proper books of account, records and documents, for each scheme so as to explain its transactions and to disclose at any point of time the financial position of each scheme and in particular give a true and fair view of the state of affairs of the fund and intimate to the Board the place where such books of account, records and documents are maintained . |
| 50 (2) Every asset management company shall maintain and preserve for a period of 169[eight] years its books of account, records and documents. |
| 50 (3) The asset management company shall follow the accounting policies and standards as specified in Ninth Schedule so as to provide appropriate details of the schemewise disposition of the assets of the fund at the relevant accounting date and the performance during that period together with information regarding distribution or accumulation of income accruing to the unitholder in a fair and true manner. |
| 55 (1) Every mutual fund shall have the annual statement of accounts audited by an auditor who is not in any way associated with the auditor of the asset management company. person who is qualified to audit the accounts of a company under section 224 of the Companies Act, 1956 (1 of 1956). |
| 55 (2) An auditor shall be appointed by the trustees. |
| 55 (3) The auditor shall forward his report to the trustees and such report shall form part of the Annual Report of the mutual fund. |
| 55 (4) The auditor s report shall comprise the following: (a) a certificate to the effect that, (i) he has obtained all information and explanations which, to the best of hisknowledge and belief, were necessary for the purpose of the audit ;(ii) the balance sheet and the revenue account give a fair and true view of the scheme,state of affairs and surplus or deficit in the Fund for the accounting period towhich the Balance Sheet or, as the case may be, the Revenue Account relates ;(iii) the statement of account has been prepared in accordance with accountingpolicies and standards as specified in the Ninth Schedule. 42 . |
| 72 Providing copies of Annual Report and summary thereof Annual Report to be forwarded to the Board Periodic and continual disclosures Half-yearly disclosures Statement of Portfolio |
| 51 The financial year for all the schemes shall end as of March 31st of each year; Provided that, for a new scheme commenced during a financial year, the disclosure and reporting requirements would apply for the period beginning from the date of its commencement and ending on March 31st of 170[that financial] year. |
| 51A The exit load charged, if any, after the commencement of the SEBI (Mutual Funds) (Second Amendment) Regulations, 2012, shall be credited to the scheme.] |
| 52 (1) All expenses should be clearly identified and appropriated in the individualschemes. |
| 52 (2) The asset management company may charge the scheme with investment and advisory fees which shall be fully disclosed in the offer document. ] the following . 172 Substituted by the SEBI (Mutual Funds) (Second Amendment) Regulations, 2012, . Prior to its substitution, Sub-regulation (2) read as under; (2) The Asset Management Company may charge the mutual fund with investment and advisory fees which are fully disclosed in the offer document subject to the following namely: year for the scheme concerned, as long as the net assets do not exceed Rs.100 crores, and Rs.100 crores. Provided that in case of an index fund scheme, the investment and advisory fees shall not exceed three fourths of one percent (0.75%) of the weekly average net assets. (i) One and a quarter of one per cent of the weekly average net assets outstanding in each accounting(ii) One per cent of the excess amount over Rs.100 crores, where net assets so calculated exceed |
| 52 (4) In addition to the fees mentioned in sub-regulation (2), the asset management company may charge the 174[scheme] with the following expenses, namely: (a) 1(b) recurring expenses including: (i) marketing and selling expenses including agents commission, if any ; (ii) brokerage and transaction cost ; (iii) registrar services for transfer of units sold or redeemed ; (iv) fees and expenses of trustees ; (v) audit fees ; (vi) custodian fees ; 176[(vii) costs related to investor communication ; (viii) costs of fund transfer from location to location ; (ix) costs of providing account statements and dividend/redemption cheques andwarrants ; (x) insurance premium paid by the fund ; (xi) winding up costs for terminating a fund or a scheme ; (xii) costs of statutory advertisements ; ] 1178[(xiia) in case of a gold exchange traded fund scheme, recurring expenses incurredtowards storage and handling of gold ; 1]180[(xiib) in case of a capital oriented scheme, rating fees ; 1]182[(xiic) in case of a real estate mutual fund scheme, insurance premia and costs ofmaintenance of the real estate assets (excluding costs of development of suchomission, sub-regulations (3) read as under ; (a) For schemes launched on a no load basis, the asset management company shall be entitled to collect anadditional management fee not exceeding 1% of the weekly average net assets outstanding in each financialyear. the words mutual fund .omission, sub-regulation (4)(a) read as under ; *[initial expenses of launching close-ended schemes, which shall be accounted in the books of account ofthe scheme in accordance with the Tenth Schedule ; ] |
| 3 8.2006. substitution, sub-regulation (xii-b) read as under;assets) over and above the expenses specified in regulation 52 to the extentdisclosed in the offer document;]183[(xiid) listing fees, in case of schemes listed on a recognised stock exchange; and]184[(xiie) in case of schemes investing in exchange traded commodity derivatives, recurringexpenses incurred towards storage and handling of the underlying goods, due tophysical settlement of such contracts.]185[(xiii)] such other costs as may be approved by the Board. |
| 3 (5) Any expense other than those specified in sub-regulations (2) and (4) shall be borne bythe asset management company 186[or trustee or sponsors].1188[(5A) In case of a scheme other than an index fund scheme or an exchange traded fund,where, as per the scheme information document, the scheme will invest a minimum ofsixty-five per cent of its net assets in equity and equity related instruments, the scheme willbe considered as equity oriented scheme for the purpose of limits of total expense ratio asspecified in these regulations.]18 |
| 3 (6) The total expense ratio of the scheme excluding issue or redemption expenses,whether initially borne by the mutual fund or by the asset management company, but *[(xii-b) in case of a real estate mutual fund scheme, insurance premia and costs of maintenance of the realestate assets (excluding costs of development of such assets) over and above the expenses specified inregulation 52 to the extent disclosed in the offer document; and] 185 Sub-clause (vii) renumbered as sub-clause (xiii) by the SEBI (Mutual Funds) (Amendment) Regulations,1998, .186 Inserted ibid..proviso of sub-regulation (5) read as under; *[Provided that initial expenses of launching a close-ended scheme shall not exceed six per cent of initialresources raised under that scheme:]#[Provided further that any excess over the 6 per cent initial issue expense shall be borne by the assetmanagement company.] to this substitution, the regulation read as: (6) The total expenses of the scheme excluding issue or redemption expenses, whether initially borneby the mutual fund or by the asset management company, but including the investment managementand advisory fee shall be subject to the following limits: (a) in case of a fund of funds scheme, the total expenses of the scheme including weighted average ofcharges levied by the underlying schemes shall not exceed 2.50 per cent of the daily net assets of thescheme.(b) in case of an index fund scheme or exchange traded fund, the total expenses of the scheme includingthe investment and advisory fees shall not exceed one and one half percent (1.5%) of the daily net assets;(c) in case of any other scheme-including the investment management and advisory fee shall be subject to the followinglimits: (a) in case of fund of funds scheme -(i) investing in liquid schemes, index fund scheme and exchange traded funds, thetotal expense ratio of the scheme including weighted average of the total expenseratio levied by the underlying scheme(s) shall not exceed 1.00 per cent of the dailynet assets of the scheme.(ii) investing a minimum of sixty-five per cent of assets under management in equityoriented schemes as per scheme information document, the total expense ratio ofthe scheme including weighted average of the total expense ratio levied by theunderlying scheme(s) shall not exceed 2.25 per cent of the daily net assets of thescheme.(iii) investing in schemes other than as specified in clause (a)(i) and (a)(ii) of this sub-regulation, the total expense ratio of the scheme including weighted average ofthe total expense ratio levied by the underlying scheme(s) shall not exceed 2.00per cent of the daily net assets of the scheme:Provided that the total expense ratio to be charged over and above the weightedaverage of the total expense ratio of the underlying scheme shall not exceed twotimes the weighted average of the total expense ratio levied by the underlyingscheme(s), subject to the overall ceilings as stated at clause a(i), a(ii) and a(iii).(i) on the first Rs.100 crores of the daily net assets 2.5%;(ii) on the next Rs.300 crores of the daily net assets 2.25%;(iii) on the next Rs.300 crores of the daily net assets 2.0%;(iv) on the balance of the assets 1.75%:Provided that in respect of a scheme investing in bonds such recurring expenses shall be lesser by atleast 0.25% of the daily net assets outstanding in each financial year. [Prior to the above substitution, sub-regulation (6) was substituted by the SEBI (Mutual Funds)(Amendment) Regulations, 2010, , which read as under; |
| 3 (6) The total expenses of the scheme excluding issue or redemption expenses, whether initially borneby the mutual fund or by the asset management company, but including the investment management andadvisory fee shall be subject to the following limits : (i) On the first Rs.100 crores of the average weekly net assets 2.5%;(ii) On the next Rs.300 crores of the average weekly net assets 2.25%;(iii) On the next Rs.300 crores of the average weekly net assets 2.0%;(iv) On the balance of the assets 1.75% :Provided that such recurring expenses shall be lesser by at least 0.25% of the weekly average net assetsoutstanding in each financial year in respect of a scheme investing in bonds :Provided further that in case of a fund of funds scheme, the total expenses of the scheme including themanagement fees shall not exceed 0.75% of the daily or weekly average net assets, depending uponwhether the NAV of the scheme is calculated on daily or weekly basis.Provided further that in case of an index fund scheme, the total expenses of the scheme including theinvestment and advisory fees shall not exceed one and one half percent (1.5%) of the weekly averagenet assets.] [*Amended by the SEBI (Mutual Funds) (Amendment) Regulations, 2003, and SEBI(Mutual Funds) (Second Amendment) Regulations, 2007, (b) in case of an index fund scheme or exchange traded fund, the total expense ratio ofthe scheme including the investment and advisory fees shall not exceed 1.00 per cent ofthe daily net assets.(c) in case of open ended schemes other than as specified in clause (a) and (b) above,the total expense ratio of the scheme shall not exceed the following limits:Assetsmanagement(In Rs. crore)underSlabon the first Rs.500crores of the dailynet assetson the next Rs.250crores of the dailynet assetson the next Rs.1,250crores of the dailynet assetson the next Rs.3,000crores of the dailynet assetson the next Rs.5,000crores of the dailynet assetsexpenseTotallimitsoriented schemesforratioequityexpenseTotallimits for otherequity |
| 1 25% the On next Rs.40,000 crores of the daily net assets Total expense ratio reduction of 0.05% for every increase of Rs.5,000 crores of daily net assets or part thereof. On balance of the |
| 0 80%(d) in case of close ended and interval schemes,(i) the total expense ratio of equity oriented scheme(s) shall not exceed 1.25 percent of the daily net assets of the scheme.(ii) the total expense ratio of close ended and interval scheme(s) other than schemesspecified in clause d (i) above shall not exceed 1.00 per cent of the daily netassets of the scheme.]190[(6A) In addition to the limits specified in sub-regulation (6), the following costs orexpenses may be charged to the scheme, namely-(a) brokerage and transaction costs which are incurred for the purpose of execution of tradeand is included in the cost of investment, not exceeding 0.12 per cent in case of cash markettransactions and 0.05 per cent in case of derivatives transactions;(b) expenses not exceeding of 0.30 per cent of daily net assets, if the new inflows fromsuch cities as specified by the Board from time to time are at least -Provided further that expenses charged under this clause shall be utilised for(i) 30 per cent of gross new inflows in the scheme, or;(ii) 15 per cent of the average assets under management (year to date) of the scheme,whichever is higher:Provided that if inflows from such cities is less than the higher of sub-clause (i) orsub- clause (ii), such expenses on daily net assets of the scheme shall be charged onproportionate basis:distribution expenses incurred for bringing inflows from such cities:Provided further that amount incurred as expense on account of inflows from suchcities shall be credited back to the scheme in case the said inflows are redeemed within aperiod of one year from the date of investment;(c) additional expenses, incurred towards different heads mentioned under sub-regulations(2) and (4), not exceeding 191[0.05] per cent of daily net assets of the scheme 192[or asspecified by the Board :] ]193[Provided that such additional expenses shall not be charged to the schemes where theexit load is not levied or applicable.. |
| 0 (7) Any expenditure in excess of the limits specified in 194[sub-regulations (6) and (6A)]shall be borne by the asset management company 195[or by the trustee or sponsors. |
| 0 (8) The provisions of sub-regulations (3), (4), (5) and (6) will come into effect 196[from 1stApril, 1997] for those schemes of mutual funds which have been launched prior tonotification of these regulations. |
| 52A A mutual fund may declare dividends in accordance with the offer document and subject to such Guidelines as may be specified by the Board.] .192 Inserted ibid.the words, symbols and number sub-regulation (6) .196 Substituted by the SEBI (Mutual Funds) (Second Amendment) Regulations, 1997, ,for after three months from the date of notification of these regulations . |
| 53 Every mutual fund and asset management company shall,(a) despatch to the unitholders the dividend warrants within 198[30] days of the declarationof the dividend;(b) despatch the redemption or repurchase proceeds within 10 working days from the dateof redemption or repurchase;199[(c) in the event of failure to despatch the redemption or repurchase proceeds within theperiod specified in sub-clause (b), the asset management company shall be liable topay interest to the unitholders at such rate as may be specified by the Board for theperiod of such delay;(d)notwithstanding payment of such interest to the unit-holders under sub-clause (c), the asset management company may be liable for penalty for failure to despatchthe redemption or repurchase proceeds within the stipulated time.] |
| 54 Every mutual fund or the asset management company shall prepare in respect of each financial year an annual report and annual statement of accounts of the schemes and the fund as specified in Eleventh Schedule. |
| 56 (1) The scheme wise Annual Report of a mutual fund or an abridged summary thereof 2 shall be provided to all unitholders as soon as may be but not later than 203[four months] from the date of closure of the relevant accounts year 204[in the manner specified by the Board]. 205[] |
| 56 (2) The Annual Report and abridged summary thereof shall contain details as specified in the Eleventh Schedule and such other details as are necessary for the purpose of providing a true and fair view of the operations of the mutual fund: 206[Provided that the abridged scheme wise Annual Report 207[provided] to the unitholders is in the format prescribed by the Board in this regard.] |
| 56 (3) Notwithstanding anything contained in sub-regulation (1), the mutual fund shall provide physical copy of the abridged summary of the Annual Report without any cost, if a request through any mode is received from a unitholder.] Prior to the amendment, the title read as Mailing of Annual Report and summary thereof . The word Amendment) Regulations, 2002, . 201 Words shall be published through an advertisement and an abridged schemewise annual report omitted by the SEBI (Mutual Funds) (Second Amendment) Regulations, 2002, . Prior to this the SEBI (MF) Amend. Regulations, 1998. .29-9-2008.Prior to the omission, the proviso read as follows: Provided that the scheme wise annual report or abridged summary thereof may be sent to investors inelectronic form on their registered e-mail address in the manner specified by the Board to this,) proviso read as under; Provided that the abridged scheme wise annual report mailed to unitholders need not contain full portfoliodisclosure but must contain details on group company investments such as the name of the company, theamount of investment made in each company of the group by each scheme and the aggregate investmentsmade by all schemes in the group companies of the sponsor] Provided further that full portfolio disclosure is not required if the full accounts are published innewspapers. ] .208 Inserted ibid.209[(3A)] The report 210[211[provided] in abridged summary form as per sub-regulation (1)]shall carry a note that 212[for unitholders of a scheme] full Annual Report shall be availablefor inspection at the Head Office of the mutual fund and a copy thereof shall be madeavailable to unitholder on payment of such nominal fees as may be specified by the mutualfund. |
| 57 Every mutual fund 2 shall within 215[four months] from the date of closure of each financial year forward to the Board a copy of the Annual Report and other information including details of investments and deposits held by the mutual fund so that the entire schemewise portfolio of the mutual funds is disclosed to the Board. |
| 58 (1) The mutual fund, the asset management company, the trustee, custodian, sponsor of the mutual fund shall make such disclosures or submit such documents as they may be called upon to do so by the Board. |
| 58 (2) Without prejudice to the generality of sub-regulation (1), the mutual fund 2 shall furnish the following periodic reports to the Board , namely: (a) copies of the duly audited annual statements of accounts including the balance sheetand the profit and loss account for the fund and in respect of each scheme, once a year;(b) a copy of six monthly unaudited accounts ;(c) a quarterly statement of movements in the net assets for each of the schemes of thefund;(d) a quarterly portfolio statement, including changes from the previous periods, for each scheme. |
| 58 (3) No sale of units of any scheme of a mutual fund shall be made by the trustees or an |
| 30 Advertisements shall be in conformity with the Advertisement Code as specified in the Sixth Schedule and shall be submitted to the Board within 7 days from the date of issue. |
| 59 A mutual fund and asset management company shall before the expiry of one month from the close of each half year that is on 31st March and on 30th September, publish its unaudited financial results in one English daily newspaper circulating in the whole of the India and in a newspaper published in the language of the region where the Head Office of the mutual fund is situated. The half-yearly results must be printed in at least 7 point times Roman font with proper spacing for easy reading : Provided that the half-yearly unaudited report referred in this sub-regulation shall contain details as specified in Twelfth Schedule and such other details as are necessary for the purpose of providing a true and fair view of the operations of the mutual fund. 2018, . 220 Inserted ibid. Prior to the omission, the proviso read as follows: Provided that statement of scheme portfolio may not be sent to the unitholders, if the statement is published, by way of an advertisement, in one English daily circulating in the whole of India and in a newspaper |
| 59A 59A. A mutual fund shall before the expiry of 219[ten days] from the close of each half- year (i.e., 31st March and 30th September), send to all unitholders a complete statement of its scheme portfolio220[, in the manner specified by the Board ]. 221[ ] |
| 60 The trustee shall be bound to make such disclosures to the unitholders as are essential in order to keep them informed about any information which may have an adverse bearing on their investments. the existing regulation 59. Prior to its substitution, regulation 59 read as under; |
| 61 (1) The Board may appoint one or more persons as inspecting officer to undertake the inspection of the books of account, records, documents and infrastructure, systems and procedures or to investigate the affairs of a mutual fund, the trustees and asset management company for any of the following purposes, namely : (a) to ensure that the books of account are being maintained by the mutual fund, thetrustees and asset management company in the manner specified in these regulations ;(b) to ascertain whether the provisions of the Act and these regulations are being compliedwith by the mutual fund, the trustees and asset management company ;(c) to ascertain whether the systems, procedures and safeguards followed by the mutualfund are adequate ;(d) to ascertain whether the provisions of the Act or any rules or regulations madethereunder have been violated ;(e) to investigate into the complaints received from the investors or any other person onany matter having a bearing on the activities of the mutual funds , trustees and assetmanagement company ;(f) to suo motu ensure that the affairs of the mutual fund, trustees or asset managementcompany are being conducted in a manner which is in the interest of the investors orthe securities market. |
| 62 (1) Before ordering an inspection or investigation under regulation 61 the Board shall give not less than ten days notice to the mutual fund, asset management company or trustees as the case may be. |
| 62 (2) Notwithstanding anything contained in sub-regulation (1), where the Board is satisfied that in the interest of the investors no such notice should be given , it may, by an order in writing direct that such inspection or investigation be taken up without such notice. |
| 62 (3) During the course of inspection or investigation, the mutual fund, trustees or asset management company against whom the inspection or investigation is being carried out shall be bound to discharge his obligations as provided in regulation 63. |
| 63 (1) It shall be the duty of the mutual fund, trustees or asset management company whose affairs are being inspected or investigated, and of every director, officer and employee thereof, to produce to the inspecting officer such books, accounts, records, and other documents in its custody or control and furnish him such statements and information relating to the activities as mutual funds, trustees or asset management company, as the inspecting officer may require, within such reasonable period as the inspecting officer mayspecify. |
| 63 (2) The mutual fund, trustees or asset management company shall allow the inspecting officer to have a reasonable access to the premises occupied by it or by any other person on its behalf and also extend reasonable facility for examining any books, records, documents and computer data in the possession of the mutual fund, trustees and asset management company or such other person and also provide copies of documents or other materials which in the opinion of the inspecting officer are relevant for the purpose of theinspection. |
| 63 (3) The inspecting officer , in the course of inspection or investigation, shall be entitled to examine or record the statements of any director, officer, or employee of the mutual fund, trustees and asset management company. |
| 63 (4) It shall be the duty of every director, officer, or employee of the mutual fund, asset management company or trustee to give to the inspecting officer all assistance in connection with the inspection or investigation, which the inspecting officer may |
| 64 The inspecting officer shall, as soon as possible, on completion of the inspection or investigation submit a report to the Board : Provided that if directed to do so by the Board , he may submit an interim report. |
| 65 The Board or the Chairman shall after consideration of inspection or investigation report take such action as the Board or Chairman may deem fit and appropriate including action under 223[Chapter V of the Securities and Exchange Board of India (Intermediaries) Regulations, 2008].] |
| 66 Without prejudice to the provisions of regulation 55, the Board shall have the power to appoint an auditor to inspect or investigate, as the case may be, into the books of account or the affairs of the mutual fund, trustee or asset management company: 222 Substituted by the SEBI (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002, . Prior to its substitution, regulation 65 read as under; (1) The Board shall, after consideration of the inspection report referred to in regulation 64, communicate the findings report of the inspecting officer to the mutual fund, trustee or asset management company as the case may be, and give him an opportunity of being heard: Provided that if any proceeding under Chapter viii are initiated the procedure under Chapter shall be followed. |
| 66 (2) On receipt of the reply if any, from the mutual fund, trustees or asset management company, as the casemay be the Board may call upon the trustees or asset management company to take such measures as theBoard may deem fit in the interest of investors , securities market and for due compliance with the provisionsof these regulations. Officer and Imposing Penalty) Regulations, 2002" by the SEBI (Intermediaries) Regulations, 2008, .Provided that the Auditor so appointed shall have the same powers of the inspecting officeras stated in regulation 61 and the obligation of the mutual fund, asset managementcompany, trustee, and their respective employees in regulation 63, shall be applicable tothe investigation under this regulation. |
| 67 The Board shall be entitled to recover such expenses including fees paid to the auditors as may be incurred by it for the purposes of inspecting the books of account, records and |
| 74 Publication of order of suspension or cancellation. The order of suspension or cancellation passed under sub-regulation (3) of regulation 72, may be published by the Board in two newspaper. |
| 76 The Board may for the offences specified in sections 15A to 15E of the Act initiate action under section 15-I of the Act and in case of violation of any of the provisions of the Act or the regulations, initiate action under section 11, 11B or section 24 of the Act. |
| 76 (2) The Board may in addition to suspension or cancellation of certificate, order suspensionof launching of any scheme of a mutual fund for a period not exceeding one year forviolation of any of the provisions of these regulations after following procedure under thisChapter. |
| 76 (3) The Board may during the pendency of any proceeding of suspension or cancellationunder this Chapter also order suspension for launching of any scheme not exceeding threemonths without following procedure under this Chapter : |
| 68 A mutual fund which (a) contravenes any of the provisions of the Act and these regulations;(b) fails to furnish any information or furnishes wrong information relating to its activityas a mutual fund as required under these regulations;(c) fails to submit periodical returns as required under these regulations;(d) does not co-operate in any inquiry or inspection conducted by the Board ;224 Substituted by the SEBI (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty)Regulations, 2002, . Prior to its substitution, regulation 68 read as under; The Board may suspend a certificate granted to a mutual fund if such mutual fund : -(a) contravenes any of the provisions of the Act and these regulations;(b) fails to furnish any information or furnishes wrong information relating to its activity as a mutual fund asrequired under these regulations;(c) fails to submit periodical returns as required under these regulations;(d) does not co-operate in any inquiry or inspection conducted by the Board ;(e) fails to comply with any directions of the Board issued under the provisions of the Act or the regulations;(f) fails to resolve the complaints of the investors or fails to give a satisfactory reply to the Board in thisbehalf;(g) indulges in unfair trade practices in securities;Exchange Board of India (Fraudulent and Unfair Trade Practices in Securities Market) Regulations, 1995;(h) is guilty of misconduct or improper or unbusinesslike or unprofessional conduct which is not inaccordance with the Code of Conduct specified in the Fifth Schedule;(i) asset management company fails to maintain the networth in accordance with the provisions of regulation21;(j) fails to pay any fees;(k) violates the conditions of registration;(l) mutual fund, asset management company or trustees of that mutual fund does not carry out its obligationsas specified in these regulations. (e) fails to comply with any directions of the Board issued under the provisions of the Act or the regulations;(f) fails to resolve the complaints of the investors or fails to give a satisfactory reply tothe Board in this behalf;(g) indulges in unfair trade practices in securities.meaning as in the Securities and Exchange Board of India (Prohibition of Fraudulentand Unfair Trade Practices Relating to Securities Market) Regulations, 1995;(h) is guilty of misconduct or improper or unbusinesslike or unprofessional conductwhich is not in accordance with the Code of Conduct specified in the Fifth Schedule;(i) asset management company fails to maintain the net worth in accordance with theprovisions of regulation 21;(j) fails to pay any fees;(k) violates the conditions of registration;(l) mutual fund, asset management company or trustees of that mutual fund does notcarry out its obligations as specified in these regulations, |
| 69 to 74. 2 Officer and Imposing Penalty) Regulations, 2002" by the SEBI (Intermediaries) Regulations, 2008,. Imposing Penalty) Regulations, 2002, . Prior to its substitution, regulation 69 to 74 read as under; 69. The Board may cancel the certificate of registration granted to a mutual fund, if such mutual fund.(a) is guilty of fraud, or has been convicted of an economic offence;(b) has been guilty of repeated defaults of the nature specified in regulation 68;(c) the mutual fund, asset management company, trustee of that mutual fund indulges in price manipulationor price rigging or cornering activities affecting the securities market and the investors interest;(d) the financial position of the mutual fund deteriorates to such an extent that the Board is of the opinionthat |
| 70 Manner of making order of cancellation or suspension No order of suspension or cancellation of certificate or the approval , as the case may be, shall be made by the Board against a mutual fund, trustees, asset management company except after holding an enquiry in |
| 71 Manner of holding enquiry before suspension or cancellation.(1) For the purpose of holding an enquiry, under regulation 70 the Board may appoint one or more enquiryofficers. |
| 71 (2) The enquiry officer shall issue to the mutual fund, asset management company or the trustee, as the casemay be, at its registered office or the principal place of its business, a notice setting out the grounds on whichaction is proposed to be taken against it and calling upon it to show cause against such action within a periodof fourteen days from the date of receipt of the notice.interest of unitholdersand other mutualtheitscontinuanceis notinisaction(3) The mutual fund, asset management company or trustee shall within fourteen days of the date of receiptof such notice, furnish to the enquiry officer a written reply, together with copies of documentary or otherevidence relied on by it or sought by the Board from the mutual fund , trustees, or asset management company. |
| 71 (4) The enquiry officer shall give a reasonable opportunity of hearing to the mutual fund, trustees, or assetmanagement company, to enable it to make submissions in support of its reply made under sub-regulation(3). |
| 71 (5) Before the enquiry officer, the mutual fund, trustees or asset management company may either appear inperson or through any person duly authorised by the mutual fund, trustees or asset management company.Provided that no lawyer or advocate shall be permitted to represent the mutual fund, trustees or assetmanagement company at the enquiry:Provided further that where a lawyer or an advocate has been appointed by the Board as a presenting officerunder sub-regulation (6), it shall be lawful for the mutual fund, asset management company or trustee topresent its case through a lawyer or advocate. |
| 71 (6) The enquiry officer may if he considers it necessary, ask the Board to appoint a presenting officer topresent its case. |
| 71 (7) The enquiry officer shall, after taking into account all relevant facts and submissions made by the mutualfund, trustees or asset management company submit a report to the Board and recommend the action, if any,to be taken against the mutual fund, trustees or asset management company as also the grounds on which the |
| 72 Show cause notice and order (1) On receipt of the report from the enquiry officer, the Board shall consider the same and issue to the mutual fund, trustees or asset management company, a show-cause notice. |
| 72 (2) The mutual fund, asset management company or trustee, shall within fourteen days of the date of thereceipt of the show-cause notice, send a reply to the Board. |
| 72 (3) The Board, after considering the reply of the mutual fund, trustees or asset management company, if any,shall as soon as possible pass such order as it deems fit. |
| 72 (4) The Board shall send to the mutual fund , trustees, or asset management company, a copy of the order |
| 73 Effect of suspension or cancellation of certificate of registration(1) On and from the date of the suspension of the certificate or the approval, as the case may be, the mutualfund, trustees or asset management company, shall cease to carry on any activity as a mutual fund, trustee orasset management company, during the period of suspension, and shall be subject to the directions of theBoard with regard to any records, documents, or securities that may be in its custody or control, relating toits activities as mutual fund, trustees or asset management company. |
| 73 (2) On and from the date of cancellation of the certificate or the approval, as the case may be, the mutualfund, trustees or asset management company shall with immediate effect, cease to carry on any activity asmutual fund, trustees or asset management company, as the case may be. |
| 73 (3) The Board may in the interest of the unit holders issue directions with regard to the transfer of any records,documents or securities that may be in its custody or control, relating to its activities as mutual fund, trusteesor asset management company. |
| 73 (4) The Board may in order to protect the interest of the unit holders order the transfer of records , document,securities, etc. to any person specifically appointed for the purpose or to any other trustee or assetmanagement company.Provided that the Board shall while appointing such a person determine the terms and conditions of such an |
| 75 The Board may initiate action for suspension or cancellation of registration of an intermediary holding a certificate of registration under section 12 of the Act who fails to exercise due diligence or to comply with the obligations under these regulations: Provided that no such certificate of registration shall be suspended or cancelled unless the procedure specified in regulations applicable to such intermediary is complied with. |
| 75A Without prejudice to regulation 68, a mutual fund and/or asset management company shall be liable for action under the applicable provisions of the Act and the Regulations framed thereunder, (a) in case the advertisement issued is in contravention with the Advertisement Codespecified in Sixth Schedule;(b) in case the valuation of securities is in contravention of the Principles of FairValuation specified in Eighth Schedule.] |
| 78 (1) The Securities & Exchange Board of India (Mutual Funds) Regulations, 1993 are hereby repealed. |
| 78 (2) Notwithstanding such repeal :(a) anything done or any action taken or purported to have been done or taken, includingregistration or approval granted, fees collected, scheme announced, registration orapproval, suspended or cancelled, any inquiry or investigation commenced under thesaid regulations , shall be deemed to have been done or taken under the correspondingprovisions of these regulations ;(b) any application made to the Board under the said regulations and pending before itshall be deemed to have been made under the corresponding provisions of these regulations ;any appeals preferred to the Central Government under the said regulations andpending before it shall be deemed to have been preferred under the correspondingprovisions of these regulations . |
| 77 In order to remove any difficulties in the application or interpretation of these regulations, the Board shall have the power to issue clarifications and guidelines in the form of notes or circulars which shall be binding on the sponsor, mutual funds, trustees, asset management companies and custodians. |
| 1 (1) These regulations may be called the Securities and Exchange Board of India ( Mutual Funds) Regulations, 1996. |
| 1 (2) They shall come into force on the date of their publication in the Official Gazette. |
| 2 In these regulations , unless the context otherwise requires: (a) Act means the Securities and Exchange Board of India Act, 1992 (15 of 1992);(b) 1[ advertisement shall include all forms of communication issue d by or on behalf ofthe asset management company/mutual fund that may influence investment decisionsof any investor/prospective investors;]substitution, clause (b) read as under;"(b) advertisement includes every form of advertising, whether in a publication, by display ofnotices, signs, labels or by means of circulars, catalogues or other documents, by an exhibition of(c) associate includes a person, (i) who directly or indirectly, by himself, or in combination with relatives, exercisescontrol over the asset management company or the trustee, as the case may be,or(ii) in respect of whom the asset management company or the trustee, directly orindirectly, by itself, or in combination with other persons exercises a control, or(iii) whose director , officer or employee is a director , officer or employee of the assetmanagement company;(d) asset management company means a company formed and registered under theCompanies Act, 1956 (1 of 1956) and approved as such by the Board under sub-regulation (2) of regulation 21;(e) broker means a stock broker as defined in Securities and Exchange Board of India(Stock Brokers and Sub-brokers) Rules, 1992;2[(ea) capital protection oriented scheme means a mutual fund scheme which isdesignated as such and, which endeavour s to protect the capital invested thereinthrough suitable orientation of its portfolio structure;](f) close-ended scheme means any scheme of a mutual fund in which the period ofmaturity of the scheme is specified;(g) control means, (i) in the case of a company any person or combination of persons who directly orindirectly own, control or hold shares carrying not less than 10% of the votingrights of such company; or(ii) as between two companies , if the same person or combination of persons directlyor indirectly, own, control or hold shares carrying not less than 10% of the votingrights of each of the two companies ; or(iii) majority of the director s of any company who are in a position to exercise controlover the asset management company;(h) custodian means a person who has been granted a certificate of registration to carryon the business of custodian of securities under the Securities and Exchange Board ofIndia (Custodian of Securities) Regulations, 1996;(i) depository means a body corporate as defined in the Depositories Act, 1996 (22 of1996);(j) economic offence means an offence to which the Economic Offences (Limitationof Prosecution) Act, 1974 (12 of 1974), applies for the time being;(k) (l) form means any of the forms specified as such in the First Schedule;pictures or photographic films, by way of sound broadcasting or television, or in any othermanner;"2002, . Prior to omission clause (k) read as under; (k) enquiry officer means any person appointed as such by the Board under chapter ix; (m) fraud for the purpose of these regulations has the same meaning as is assigned toit in section 17 of the Indian Contract Act, 1872 (9 of 1872);4[(ma) fund of funds scheme means a mutual fund scheme that invests primarily in otherschemes of the same mutual fund or other mutual funds;]5[(mb) gold exchange traded fund scheme shall mean a mutual fund scheme that investsprimarily in gold or gold related instruments;(mc) gold related instrument shall mean such instrument having gold as underlying, asmay be specified by the Board from time to time;]6[(md) goods means the goods notified by the Central Government under clause (bc) ofsection 2 of the Securities Contracts (Regulation) Act, 1956 and forming theunderlying of any commodity derivative;]7[(mm) group means a group as defined in clause (ef) of section 2 of the Monopolies andRestrictive Trade Practices Act, 1969 (54 of 1969);]8[(mn) index fund scheme means a mutual fund scheme that invests in securities in thesame proportion as an index of securities;]9[(mo) InvIT or Infrastructure Investment Trust shall have the meaning assigned inclause (za) of sub-regulation (1) of regulation 2 of the Securities and Exchange Board of India (Infrastructure Investment Trusts) Regulations, 2014;](n) inspecting officer means any person appointed as such by the Board under ChapterVIII;(o) money market instruments includes commercial papers, commercial bills, treasurybills, Government securities having an unexpired maturity up to one year, call ornotice money, certificate of deposit, usance bills, and any other like instruments asspecified by the Reserve Bank of India from time to time;(p) money market mutual fund means a scheme of a mutual fund which has been setup with the objective of investing exclusively in money market instruments;10[(q) mutual fund means a fund established in the form of a trust to raise monies throughthe sale of units to the public or a section of the public under one or more schemesfor investing in securities including money market instruments or gold or goldrelated instruments or real estate assets11[:]]substitution , clause (q) read as under; (q) mutual fund means a fund established in the form of a trust to raise monies through the sale of unitsto the public or a section of the public under one or more schemes for investing in securities, includingmoney market instruments *[or gold or gold related instruments]; 12[Provided that infrastructure debt fund schemes may raise monies through privateplacement of units, subject to conditions specified in these regulations ;]13[Provided further that mutual fund schemes investing in exchange tradedcommodity derivatives may hold the underlying goods in case of physical settlementof such contracts.](r) offer document means any document by which a mutual fund invites public forsubscription of units of a scheme;(s) open-ended scheme means a scheme of a mutual fund which offers units for salewithout specifying any duration for redemption;14[(sa) "private placement" means any offer of units of a mutual fund scheme orinvitation to subscribe such units to a select group of persons , by a mutual fund (otherthan by way of public offer) through issue of a placement memorandum and whichis not being calculated to result, directly or indirectly in the units becoming availablefor subscription or purchase by persons other than those receiving the offer orinvitation;]15[(sb) REIT or Real Estate Investment Trust shall have the meaning assigned inclause (zm) of sub-regulation 1 of regulation 2 of the Securities and Exchange Board of India (Real Estate Investment Trusts) Regulations, 2014;]16[17(sc) real estate mutual fund scheme means a mutual fund scheme that investsdirectly or indirectly in real estate assets or other permissible assets in accordancewith these regulations ;](t) relative means a person as defined in section 6 of the Companies Act, 1956 (1 of1956);(u) scheme means a scheme of a mutual fund launched under Chapter V;(v) schedule means any of the schedules annexed to these regulations ;(w) securities laws means the Securities and Exchange Board of India Act, 1992 (15of 1992), the Securities Contracts (Regulation) Act, 1956 (42 of 1956) and theDepositories Act, 1996 (22 of 1996), including their amendments and such otherlaws as may be enacted from time to time;(x) sponsor means any person who, acting alone or in combination with another bodycorporate, establishes a mutual fund; |
| 49A For the purposes of this Chapter, unless the context otherwise requires-(a) real estate asset means an identifiable immovable property-(i) which is located within India in such city as may be specified by the Board fromtime to time or in a special economic zone within the meaning of clause (za) of section2 of the Special Economic Zones Act, 2005 (28 of 2005);(ii) on which construction is complete and which is usable;(iii) which is evidenced by valid title documents;(iv) which is legally transferable;(v) which is free from all encumbrances;(vi) which is not subject matter of any litigation;but does not include-I. a project under construction; or 4II. vacant land; orIII. deserted property; orIV. land specified for agricultural use; orV. a property which is reserved or attached by any Government or other authority orpursuant to orders of a court of law or the acquisition of which is otherwiseprohibited under any law for the time being in force;(b) real estate valuer means a qualified valuer of real estate assets who has beenaccredited by a credit rating agency registered with the Board. the sale price is determined by adding to the future Net Asset Value a fixed premium which is declared inadvance. |
| 49B (1) The provisions of this Chapter shall apply to real estate mutual fund schemes. |
| 49B (2) Unless the context otherwise requires, all other provisions of these regulations and the guidelines and circulars issues thereunder shall apply to real estate mutual fund schemes, and trustees and asset management companies in relation to such schemes, except where specific provisions are made in relation thereto under this Chapter. |
| 49C (1) A Certificate of registration may be granted under regulation 9 to an applicant proposing to launch only real estate mutual fund schemes if he;-(a) has been carrying on business in real estate for a period of not less than five years;(b) fulfills eligibility criteria provided in regulation 7, except that specified in item (i) |
| 49C (2) A real estate mutual fund scheme of a mutual fund registered under subregulation (1) shall not invest in the securities mentioned in sub-clauses (ii) to (iii) of clause (a) or in clause (b) of sub-regulation (2) of regulation 49E unless it has key personnel having adequate professional experience in finance and financial services related field. |
| 49C (3) An existing mutual fund may launch a real estate mutual fund scheme if it has an |
| 49D (1) Every real estate mutual fund scheme shall be close-ended and its units shall be listed on a recognized stock exchange : Provided that the redemption of a real estate mutual fund scheme may be done in a staggered manner. |
| 49D (2) The units issued by a real estate mutual fund scheme shall not confer any right on the unit holders to use the real estate assets held by the scheme and any provision to the contrary in the trust deed or in the terms of issue shall be void. |
| 49D (3) The title deeds pertaining to real estate assets held by a real estate mutual fund scheme shall be kept in safe custody with the custodian of the mutual fund. |
| 49D (4) A real estate mutual fund scheme shall not undertake lending or housing financeactivities. |
| 49D (5) All financial transactions of a real estate mutual fund scheme shall be routed through |
| 49E (1) Every real state mutual fund scheme shall invest at least thirty five per cent. of the net assets of the scheme directly in real estate assets. |
| 49E (2) Subject to sub-regulation (1), every real estate mutual fund scheme shall invest-(a) at least seventy five per cent. of the net assets of the scheme in-(i) real estate assets;(ii) mortgage backed securities (but not directly in mortgages);(iii) equity shares or debentures of companies engaged in dealing in real estateassets or in undertaking real estate development projects, whether listed on arecognized stock exchange in India or not;(b) the balance in other securities ; |
| 49E (3) Unless otherwise disclosed in the offer document, no mutual fund shall, under all its real estate mutual fund schemes, invest more than thirty per cent. of its net assets in a singlecity. |
| 49E (4) No mutual fund shall, under all its real estate mutual fund schemes, invest more than fifteen per cent. of its net assets in the real estate assets of any single real estate project. by a builder in a single location within a city. |
| 49E (5) No mutual fund shall, under all its real estate mutual fund schemes, invest more than twenty five per cent. of the total issued capital of any unlisted company. |
| 49E (6) No mutual fund shall invest more than fifteen per cent of the net assets of any of its real estate mutual fund schemes in the equity shares or debentures of any unlisted company. |
| 49E (7) No real estate mutual fund scheme shall invest in (a) any unlisted security of the sponsor or its associate or group company;(b) any listed security issued by way of preferential allotment by the sponsor or itsassociate or group company;(c) any listed security of the sponsor or its associate or group company, in excess oftwenty five per cent of the net assets of the scheme. |
| 49E (8) No mutual fund shall transfer real estate assets amongst its schemes. |
| 49E (9) No mutual fund shall invest in any real estate asset which was owned by the sponsor or the asset management company or any of its associates during the period of last five years |
| 49F (1) The real estate assets held by a real estate mutual fund scheme shall be valued (a) at cost price on the date of acquisition; and(b) at fair price on every ninetieth day from the day of its purchase in accordance withthe norms specified in Schedule IXB. |
| 49F (2) The asset management company, its directors, the trustees and the real estate valuer shall ensure that the valuation of assets held by a real estate mutual fund scheme are done in good faith, in accordance with the norms specified in Schedule IX B and that the accounts of the scheme are prepared in accordance with accounting principles specified in Schedule XI. |
| 49F (3) The net asset value of every real estate mutual fund scheme shall be calculated and declared at the close of each business day on the basis of the most current valuation of the |
| 49G (1) Without prejudice to the provisions of regulation 21, the asset management company of a mutual fund having real estate mutual fund schemes shall appoint suitable number of qualified key personnel with relevant experience, before undertaking investment management of real estate assets of a real estate mutual fund scheme. |
| 49G (2) The asset management company may appoint advisors to advise it on acquisitions or proposed acquisitions of real estate assets. |
| 49G (3) The asset management company shall exercise due care while appointing real estate valuers for valuing the real estate assets held by the real estate mutual fund scheme and shall ensure that there is no conflict of interest. |
| 49G (4) The asset management company shall lay down an adequate system of internal controls and risk management. |
| 49G (5) The asset management company shall put in place systems to ensure that all financial transactions are done through banking channels and exclude transactions in cash or unaccounted transactions. |
| 49G (6) The asset management company shall exercise due diligence in maintenance of the assets of a real estate mutual fund scheme and shall ensure that there is no avoidable deterioration in their value. |
| 49G (7) The asset management company shall ensure that the real estate assets held by a real estate mutual fund scheme are adequately insured against impair, damage or destruction. |
| 49G (8) The asset management company shall ensure that the cost of maintenance and insurance of real estate assets is within reasonable limits and that no funds of the scheme are utilized towards development of such assets. |
| 49G (9) The asset management company shall ensure that a real estate valuer certifies compliance with sub-regulation (8) on an annual basis. |
| 49G (10) The asset management company shall ensure that no real estate valuer continues with valuation of particular real estate asset for more than two years and that no such valuer values the same asset for a period of at least three years thereafter. |
| 49G (11) The asset management company shall record in writing, the details of its decision making process in buying or selling real estate assets together with the justifications for such decisions and forward the same periodically to trustees. |
| 49G (12) The asset management company shall ensure that investment of funds of the real estate mutual fund scheme is not made contrary to provisions of this chapter and the trust deed. 154[(13) The asset management company shall obtain, wherever required under these regulations, prior in-principle approval from the recognized stock exchange(s) where units are proposed to be listed .] |
| 49H (1) The asset management company may let out or lease out the real estate assets held by the real estate mutual fund scheme if the term of such lease or letting does not extend beyond the period of maturity of the scheme. |
| 49H (2) Where real estate assets are let out or leased out, the asset management company shall diligently collect the rents or other income in a timely manner. |
| 49H (3) Real estate assets held by a real estate mutual fund scheme may be let out to the sponsor, asset management company or any of their associates, at market price or otherwise on commercial terms: Provided that not more than 25% of the total rental income of the scheme shall be derived from assets so let out. |
| 49I (1) The trustees shall ensure that the asset management company has the necessary expertise, internal control systems and risk management mechanism to invest in and manage investments in real estate assets on a continuous basis. |
| 49I (2) The trustees shall monitor whether due diligence is exercised by the asset management company in managing the investments. |
| 49I (3) The trustees shall review the market price of the units during the year and shall recommend proportionate buy back of units from unit holders, if the units are traded at steep discount to the net asset value. |
| 49I (4) The magnitude of discount which shall amount to steep discount referred to in sub- regulation (3) shall be disclosed in the offer document. |
| 49I (5) The trustees shall ensure that only permissible investments are made by the asset management company. |
| 49I (6) The trustees shall ensure that all financial transactions of the real estate mutual fund scheme are made only through banking channels and that systems exist to exclude transactions in cash and unaccounted transactions. |
| 49I (7) The trustees shall lay down the criteria for empanelment of real estate brokers. |
| 49I (8) The trustees shall lay down the broad procedure to be followed by the assert management company while transacting in real estate assets. |
| 49I (9) The trustees shall require the asset management company to set up such systems and submit such reports to trustees, as may be necessary for them to effectively monitor the performance and functioning of the real estate mutual fund schemes. |
| 49I (10) The trustees shall include a confirmation on compliance with sub regulation (9) in their half yearly reports made to the Board. 155[(11) The trustees shall obtain, wherever required under these regulations, prior in- principle approval from the recognised stock exchange(s) where units are proposed to belisted.] |
| 49J (1) The offer documents of real estate mutual fund schemes shall contain disclosures which are adequate for investors to make informed investment decisions and such further disclosures as may be specified by the Board. |
| 49J (2) The portfolio disclosures and financial results in respect of a real estate mutual fund scheme shall contain such further disclosures as are specified by the Board. |
| 49J (3) Advertisements in respect of real estate mutual fund schemes shall conform to such guidelines as may be specified by the Board. |
| 49K (1) All transactions done by the trustees or the employees or directors of the asset management company or the trustee company in real estate assets shall be disclosed by them to the compliance officer within one month of the transaction. |
| 49K (2) The compliance officer shall make a report thereon from the view point of possible conflict of interest and shall submit it to the trustees with his recommendations, if any. |
| 49K (3) The persons covered in sub-regulation (1) may obtain the views of the trustees before |
| 49L For the purposes of this Chapter, unless the context otherwise requires-(1) Infrastructure debt fund scheme means a mutual fund scheme that invests primarily(minimum 90% of scheme assets) in the debt securities or securitized debt instrument ofinfrastructure companies or infrastructure capital companies or infrastructure projects orspecial purpose vehicles which are created for the purpose of facilitating or promotinginvestment in infrastructure, and other permissible assets in accordance with theseregulations or bank loans in respect of completed and revenue generating projects ofinfrastructure companies or projects or special purpose vehicles. |
| 49L (2) Infrastructure includes the sectors as specified by guidelines issued by the Board oras notified by Ministry of Finance, from time to time. |
| 49L (3) Strategic Investor means;(i) an Infrastructure Finance Company registered with Reserve bank of India asNon Banking Financial Company;(ii) a Scheduled Commercial Bank;(iii) International Multilateral Financial Institution;157[(iv) Systemically Important Non Banking Financial Companies registered withReserve Bank of India;(v) Foreign Institutional Investors registered with the Board, subject to theirapplicable investment limits, which are long term investors in terms of thenorms specified by SEBI.]Regulations, 2011, . |
| 49M (1)The provisions of this chapter shall apply to infrastructure debt fund schemes launched by mutual funds. |
| 49M (2) All other provisions of these regulations and the guidelines and circulars issued thereunder, unless the context otherwise require or repugnant to the provisions of this chapter, shall apply to infrastructure debt fund schemes, trustees and asset management companies in relation to such schemes. |
| 49N (1) An existing mutual fund may launch an infrastructure debt fund schemes if it has an adequate number of key personnel having adequate experience in infrastructuresector. |
| 49N (2) A certificate of registration may be granted under regulation 9 to an applicant proposing to launch only infrastructure debt fund schemes if the sponsor or the parent company of the sponsor: -(a) has been carrying on activities or business in infrastructure financing sectorfor a period of not less than five years;(b)fulfills eligibility criteria provided in Regulation 7.sponsor shall mean a company which holds at least 75% of paid up equityshare capital of the sponsor.158[Offering period.49NA. No scheme of an infrastructure debt fund, in the case of a public offer , shall beopen for subscription for more than forty five days.] |
| 49O (1) An infrastructure debt fund scheme shall be launched either as close-ended scheme maturing after more than five years or interval scheme with lock-in of five years and 159[specified transaction period of not more than forty five days] as may be specified in the scheme information document160[:] 161[Provided that the tenure of the scheme may be extended to two years subject to approval of two-thirds of the unitholders by value of their investment in the scheme.] |
| 49O (2) Units of infrastructure debt fund schemes shall be listed on a recognized stock exchange, provided that such units shall be listed only after being fully paid up. Regulations, 2013, . |
| 49O (3) Mutual Funds may disclose indicative portfolio of infrastructure debt fund scheme to its potential investors disclosing the type of assets the mutual fund will be investing. |
| 49O (4) An infrastructure debt fund scheme shall have minimum five investor s and no single investor shall hold more than fifty percent of net assets of the scheme. |
| 49O (5) No infrastructure debt fund scheme shall accept any investment from any investor which is less than Rupees one crore. |
| 49O (6) The minimum size of the unit shall be Rupees ten lakhs. |
| 49O (7) Each scheme launched as infrastructure debt fund scheme shall have firm commitment from the strategic investors for contribution of an amount of at least Rupees twenty five crores before the allotment of units of the scheme are marketed to other potentialinvestors. |
| 49O (8) Mutual Funds launching infrastructure debt fund scheme may issue partly paid units to the investors , subject to following conditions:(a) The asset management company shall call for the unpaid portionsdepending upon the deployment opportunities;(b) The offer document of the scheme shall disclose the interest or penaltywhich may be deducted in case of non payment of call money by the investors within stipulated time; and(c) The amount of interest or penalty shall be retained in the scheme.162[Private Placement.49-OA. (1) The units of an infrastructure debt fund scheme may be offered through privateplacement to less than fifty persons , subject to approval by the trustees and the board ofthe asset management company. |
| 49O (2) The offer made under sub-regulation (1), shall be subject to the following:(a) A placement memorandum, in the manner as specified by the Board , shall be filedby the mutual fund with the Board at least seven days prior to the launch of the scheme;and(b) the mutual fund shall pay to the Board , filing fee as specified in the SecondSchedule.] |
| 49P (1) Every infrastructure debt fund scheme shall invest at least ninety percent of the net assets of the scheme in the debt securities or securitized debt instruments of infrastructure companies or projects or special purpose vehicles which are created for the purpose of facilitating or promoting investment in infrastructure or bank loans in respect of completed and revenue generating projects of infrastructure companies or special purpose vehicle 163[: ] 164[Provided that the funds received on account of re-payment of principal, whether by way of pre-payment or otherwise, with respect to the underlying assets of the scheme, shall be invested as specified in this sub-regulation : Provided further that if the investments specified in this sub-regulation are not available, such funds may be invested in bonds of Public Financial Institutions and Infrastructure Finance Companies.] |
| 49P (2) Subject to sub-regulation (1), every infrastructure debt fund scheme may invest the balance amount in equity shares, convertibles including mezzanine financing instruments of companies engaged in infrastructure, infrastructure development projects, whether listed on a recognized stock exchange in India or not; or money market instruments and bank deposits. |
| 49P (3) The investment restrictions shall be applicable on the life-cycle of the infrastructure debt fund scheme and shall be reckoned with reference to the total amount raised by the infrastructure debt fund scheme. |
| 49P (4) No mutual fund shall, under all its infrastructure debt fund schemes, invest more than thirty per cent of its net assets in the debt securities or assets of any single infrastructure company or project or special purpose vehicles which are created for the purpose of facilitating or promoting investment in infrastructure or bank loans in respect of completed and revenue generating projects of any single infrastructure company or project or special purpose vehicle. |
| 49P (5) An infrastructure debt scheme shall not invest more than 30% of the net assets of the scheme in debt instruments or assets of any single infrastructure company or project or special purpose vehicles which are created for the purpose of facilitating or promoting investment in infrastructure or bank loans in respect of completed and revenue generating projects of any single infrastructure company or project or special purpose vehicle165[.] 1 167[(5A) The overall investments by an infrastructure debt fund scheme in debt instruments or assets of infrastructure companies or projects or special purpose vehicles, which are created for the purpose of facilitating or promoting investment in infrastructure or bank loans in respect of completed and revenue generating projects of infrastructure companies or projects or special purpose vehicles, which are rated below investment grade or are unrated, shall not exceed 30% of the net assets of the scheme: Provided that the overall investment limit may increase up to 50% of the net assets of the scheme with the prior approval of the trustees and the board of the asset managementcompany.] |
| 49P (6) No infrastructure debt fund scheme shall invest in (Amendment) Regulations, 2013, . read as, Provided that such investment limit may be extended upto 50% of the net assets of the scheme with the prior approval of the board of trustees and the board of asset management company. (i) Any unlisted security of the sponsor or its associate or group company;(ii) Any listed security issued by way of preferential allotment by the sponsor or itsassociate or group company;(iii) Any listed security of the sponsor or its associate or group company or bank loanin respect of completed and revenue generating projects of infrastructure companiesor special purpose vehicles of the sponsor or its associate or group companies, inexcess of twenty five per cent of the net assets of the scheme, subject to approvalof trustees and full disclosures to investors for investments made within theaforesaid limits; or168[(iv) any asset or securities owned by the sponsor or asset management company ortheir associates in excess of 30% of the net assets of the scheme, provided that-(a) such investment is in assets or securities not below investment grade;(b) the sponsor or its associates retains atleast 30% of the assets orsecurities, in which investment is made by the scheme, till the assets orsecurities are held in the scheme portfolio; and(c) approval for such investment is granted by the trustees and fulldisclosures are made to the investors regarding such investment.] |
| 49Q (1) The assets held by an infrastructure debt fund scheme shall be valued in good faith by the asset management company on the basis of appropriate valuation methods based on principles approved by the trustees. |
| 49Q (2) The valuation shall be documented and the supporting data in respect of each security so valued shall be preserved at least for a period of five years after the expiry of the scheme. |
| 49Q (3) The methods used to arrive at values in good faith shall be periodically reviewed by the Trustees and by the statutory auditor of the mutual fund. |
| 49Q (4) The valuation policy approved by the board of asset management company shall be disclosed in the scheme information document. |
| 49Q (5) The net asset value of every infrastructure debt fund scheme shall be calculated and declared atleast once in each quarter. |
| 49R (1) The asset management company shall lay down an adequate system of internal controls and risk management. substitution, clause (iv) read as follows: "Any asset or securities owned by the sponsor or asset management company or its associates, in excess of 20% of the net assets of the scheme not below investment grade, subject to approval of trustees and full disclosures to investors for investments made within the aforesaid limits." |
| 49R (2) The asset management company shall exercise due diligence in maintenance of the assets of an infrastructure debt fund scheme and shall ensure that there is no avoidable deterioration in their value. |
| 49R (3) The asset management company shall record in writing, the details of its decision making process in buying or selling infrastructure companies assets together with the justifications for such decisions and forward the same periodically to trustees. |
| 49R (4) The asset management company shall ensure that investment of funds of the Infrastructure Debt Fund schemes is not made contrary to provisions of this chapter and the trust deed. |
| 49R (5) The asset management company shall obtain, wherever required under these regulations, prior in-principle approval from the recognized stock exchange(s) where units are proposed to be listed . |
| 49R (6) The asset management company shall institute such mechanisms as to ensure that proper care is taken for collection, monitoring and supervision of the debt assets by appointing a service provider having extensive experience thereof, if required. |
| 49S (1) The offer documents of infrastructure debt fund schemes shall contain disclosures which are adequate for investors to make informed investment decisions and such further disclosures as may be specified by the Board. |
| 49S (2) The portfolio disclosures and financial results in respect of an infrastructure debt fund schemes shall contain such further disclosures as may be specified by the Board. |
| 49S (3) Advertisements in respect of infrastructure debt fund schemes shall conform to such guidelines as may be specified by the Board. |
| 49T (1) All transactions done by the trustees or the employees or directors of the asset management company or the trustee company in the investee companies shall be disclosed by them to the compliance officer within one month of the transaction. |
| 49T (2) The compliance officer shall make a report thereon from the view point of possible conflict of interest and shall submit it to the trustees with his recommendations, if any. |
| 49T (3) The persons covered in sub-regulation (1) may obtain the views of the trustees before |
| 76A (1) The Board may, exempt any person or class of persons from the operation of all or any of the provisions of these regulations for a period as may be specified but not exceeding twelve months, for furthering innovation in technological aspects relating to testing new products, processes, services, business models, etc. in live environment of regulatory sandbox in the securities markets . Regulations, 2020,. |
| 76A (2) Any exemption granted by the Board under sub-regulation (1) shall be subject to the applicant satisfying such conditions as may be specified by the Board including conditions |